I don't think you are over reacting at all. There should have been some sort of punishment as you said , especially when it was done intentionally. And I totally agree as not putting her up when they are there....this is her HOUSE!! I used to put Phoebe in a gated area when we had company and I hated it , but felt like it needed to be done ,not sure if they wanted a little one jumping around and giving kisses . But she is only like that for a short time until she does her greetings and then she's on about her business , so I told hubby I was no longer going to do that if they didn't like dogs then they could stay home
this was her home and they were the visitors
After some cooling down time maybe you two could get together and talk.