I don't think anyone is questioning the fact that the dog came to you in bad condition and that Glenda is at fault for it. It's obvious that she is in a much better place now, and that's wonderful for the little girl.
What someone was trying to point out above is that you have two options right now:
#1 Spay her and keep her as just a pet. If you decide that you still want to step into the show ring in the future--start over again and this time with a reputable breeder who is thoroughly checked out, etc.
OR #2: Sign Glenda's required contract in order to recieve her AKC papers (which I assume she is holding until you sign said contract), and enter into an agreement with her that keeps you "bound" to an irresponsible breeder for many years to come. This second option seems to be the ONLY way that you will get her AKC papers on full registration--and in order to show/breed her you would HAVE to have the full registration papers.
SO the question they were asking is why would you want to enter a contract with someone you disagree with and who is obviously not a reputable breeder? That's what they meant...if those are your only two options...why choose the 2nd knowing what kind of breeder you're dealing with in Glenda?
My personal advice would be to just keep her and spay her, and love her as a special little pet. She deserves it after her rough start in life. It's great that she was "rescued" from that awful situation and she has a chance for a new beginning with you. Work with her and take her everywhere you go--she is still young enough that she can be "re-socialized" and come out of her shell.
I pulled a little 2 year old Yorkie girl from an outside kennel who had probably never been held or touched this Spring. She was so afraid of people. It took me several days once she was in my home before I could pick her up. She was incredibly thin as well and covered in fleas, infested with worms. Long story short...she was placed into a very special home with a wonderful family who was recommended to me by a friend. She is now a beautiful spayed little princess who LOVES her family, belly rubs, cuddling, her toys (which she had never seen before she came to me), and she has filled out and in a good healthy size because her new mom cooks for her every day. Her pictures make me cry every time I get an update--she has truly made a 180. So, there IS hope for this little girl to turn around in her personality. Just wanted to share that story with you.
Good luck with your new baby!