I think you did the right thing. Unfortunately, everywhere you look at Easter there are pictures of chicks in Easter baskets - it's such a cultural icon that blunt may have been what she needed to get past that image (I bet the image someone presented of chicken poop in the kid's Easter Basket would have done the trick, too!
). But I really like the suggestion of hatching eggs. By the time they've spent 3 weeks tending, watching & waiting, then see them slowly pick their way out of the shell, the kids are totally invested in the chicks' welfare. Our first batch hatched right around Easter last year (didn't plan it that way, just how it worked out), and my little one was mesmerized! WAY cooler than a single chick in a basket, and, after watching them grow up, he got the money from selling them, which was put toward a (Thomas the Tank Engine - themed) vacation.
Oh, and ITA on bunnies - I have a friend who does rabbit rescue, and every year she gets calls to come round up bunnies that were just turned loose after Easter. People believe that they'll go feral and thrive, but they can't breed w/native cottontails, and will not be accepted. If they don't die of exposure, and the native rabbits/dogs/hawks/etc. don't kill them, and they don't get hit by cars, they'll starve to death. And I won't even get started on puppies & kittens...