Yes the baby could be small for his age. My son is still in the 6th percentile at 8 yrs old, but all milestones were completely on target, so it wasn't as much of an issue, just packing in the calories/nutrients is the main focus. I agree that all kids reach milestones at different points, so you have to be aware of what you can handle, depending on the needs of the rest of the group. I have 2 under 2's right now and some preschoolers, but my hands are full, so I know I wouldn't take on a child with needs that high, but we're all different people with different patience/tolerance levels, and different group strengths/weaknesses.
I do find it interesting that the child wasn't there for the interview, and that they were resistant to another visit before starting. My gut says that they knew there were delays, and were afraid they wouldn't find care for the child if they were forthright about his needs. Just a feeling...
I do 2 mandatory visits with the whole family before signing a contract, as I have found a few times that I had a certain "gut feeling" about some issues the first time, and wanted to look at the situation again to make sure I wasn't off base.