I think you responded great to her initial message. As far as the underlying threat of removing her children if you don't comply...oh well! That may sound harsh and I know we all get attached to the children but this is your business, not hers. You work. For yourself not your families. I have struggled with this in the past and from experience once you start making concessions about one thing they start to make additional demands and before you know it you are bitter and resenting the children. If she doesn't want to follow your rules you can politely remind her she is free to find alternate care and in the same breath I would remind her you require x amount of notice. Start advertising now!