I am so sorry Shannon! This person is a BAD manager / business person. I can't believe she told you you were being difficult, when in fact, it is shopping at her store that is difficult! She's making YOUR life more difficult with all this. You were right, and she should have changed the jeans.
This is what people will do to try to escape a situation where they are at fault: they try to make YOU feel guilty. The way she dealt with you is unacceptable. She is trying to insinuate you are a liar? Because when she replies that "No, you didn't specify you wanted it touching the floor" when you say to her you did, she is actually treating you of being a liar. So who wants to treat a valued customer of being a liar?
I second Alaskagirl's idea of a letter. In it, say what type of customer you are: that fashion is your hobby, and what attracted you to their boutique in the first place. Then state what happened. Then say why you are unhappy, and that you are thinking of never shopping there again (leave them a little door). When they receive it, they have two choices: ignore it, in which case it is the business equivalent of shooting yourself in the foot, or respond: in which case they might offer you something in compensation to influence you to come back to their shop.
With her head cooling a little, this terrible manager might see the light and comprehend what she is doing to her own reputation.
Anyway I am so happy you did go, though. You tried, you fought for yourself and that is what is most important. Now you know that this shop's management is bad. Even if you like the clothes there, I would recommend not going until they straiten things up, not because of their not wanting to take back the jeans they had ruined in altering, but because the way it is run, one is bound to make "mistakes". Who knows what type of bad policies they might have, like selling old or defective stocks etc.
Many many hugs to you. Bravo for going and standing your ground in front of this horrible woman.