I think you are over reacting - IMO. I mean, most likely this breeder had no idea she has this around her house or that her other dogs are infected. If you haven't contacted your breeder yet, you should.
A) because she SHOULD pay you for the treatment(s)
B) because she needs to know so she can treat it at her house too.
If you don't get anywhere with her, then you have reason to to doubt her credibility, again IMO.
So,,...I wouldn't give the puppy back, unless its what you WANT to do. This is treatable, but may take a few rounds. If the breeder pays for this, it shouldn't be too much on you (besides a pain in the butt
)
Also you should have a contract that states you should have your puppy checked out in the first...48, 72 hours (Whatever they chose), which you did, so there ya go....