Perhaps the mother doesn't want her child to feel even more different than she does now? Or do you consider someone with epilepsy emotionally unstable/mentally deficient?
I don't consider them mentally untable or deficient in the slightest. But she IS physically different--I'm sorry, but she is. I think she should have the right to have the dog, but schools have procedures for this sort of thing. If you need a dog in class, then the doctor will sign a letter saying it is a medical necessity, and you go through the IEP and will get the dog.
In my mind this is just the mom refusing to go through the established process that the school has for setting up special services. She's the one at fault here, not the school.
But it's the law. Any student needing anything special in education serivces must fill one out. Maybe it can be used against a family, but that has not been my experience. It allows the school district to give the child the special attetion she needs with family and professional input. I'm surprised that the district allowed the dog to come at all without an IEP.
My daughter went through the testing to have an IEP. It is no big deal. Kids are used to testing at school. In fact, most of them love it because they get one-on-one attention instead of being bored in the classroom.