OP, lacking italics via this fone I'm on, my opinion (remember you did ask for opinions, not votes) is inserted in line below in caps.

Please give me your opinions: Is it an unreasonable expectation to have my discomfort accommodated by the hosts, YES BECAUSE YOU KNOW OF THEIR DOG, AND.... or have they lost all sense of proportion regarding human vs. canine? NO (you may be overreacting/misinterpreting a social signal) THEY ARE SHARING WHERE THEY ARE AT WITH THIS CANINE AT THIS POINT IN ITS TRAINING (and their confidence as dog handlers), AND....

Now that they know more about your needs, however ungraciously you may have stated them, they can incorporate that knowledge into any future invites. Speaking JUST FOR ME, I would think long and hard whether to put someone who can't be trusted to negotiate-- instead of deliver ultimatums as your description sounded to me-- on any guest list.

Also, again speaking just for myself, my service dogs' skills always include discernment of aggressive people. My dogs have kept me out of quite a bit of danger by going off on ppl I might let too close otherwise. Sometimes a dog really does know best.

~Susan