When it all comes down to it, it's your house. Tell that lady (& your family) to get a life!!! My family always has something negative to say...is yours the same way?
My roommate and I have piddle pads in the kitchen and right next the kitchen in the dining room (which we've converted to the computer room.) I'm sure if my mom saw the piddle pad in the kitchen she would freak!!! But we're both college students and I can count on one hand the amount of time that we've actually cooked in the kitchen!!!
Whatever gets little Izzie to stop peeing on the carpet is going to be the method of choice. Right now, it's putting the piddle pads at their current locations (sometimes!) She's only 11 weeks old, so going potty outside is out of the question.