It sounds like the lady had a bad attitude. Did one of you go and meet the dogs though? Then you would be able to have a better idea if they were suitable for your family and you could perhaps set up a time for everyone to meet them. Doing it as a big group might be overwhelming to the dogs though, especially considering the stress they're under already being at the shelter - small groups may be better at the beginning.
I doubt that the dogs were euthanized - they were likely adopted out, small dogs are often in high demand.
I don't understand - how is interviewing the family nit-picky? I would think that it's a good sign that they want to place the animals with families that are a good match. Since they don't know anything about you, an interview seems like a good way to learn more.
Because it wasn't just about the interviewing.. among other things, they wanted in home visits and references from at least two veternarians and a list of the neighbors in my neigborhood.
That IS being nit-picky.....so ummmm no thanks Farmer Ted down the road has more than enough critters to go around and I don't have to submit to drug testing or background checks.