I think stuff like this happens very often when private owners attempt to run their own shelter. It is too easy to get too emotionally or financially involved with the animals. I know of a couple private run animal shelters around here. I won't name it, but I knew the gentleman who ran it. The problem with a private owned shelter is that, a single or couple of people run it, making it easily corruptable.
The couple that I know are good people, but their "no-kill" shelter is a joke. They have HUNDREDS of animals crammed into any cage that will hold them, animals are living in discusting conditions, and the shelter has been put on probation/closed down at least twice and told to at least reduce it's numbers. Animals have to be "approved" before accepted into the shelter, and guess what gets in? Purebreds and purebred lookalikes. People who run the shelter go to the kill shelters and adopt anything they think will turn a buck for their no-kill shelters. Puppies, small dogs, and purebreds are "saved" and accepted into the no kill shelter. What is the "adoption" fee for the no-kill shelter? Typically $90-180, and higher if the animal needed medical bills. What happens if the animal is "unsaveable"? It's sent to a kill-shelter to be disposed off. So basically to me, regardless of all good intention, this "no-kill" shelter is in reality a pet store that takes dogs that were thrown away and turns a buck off of them. To me, that's an animal trader. So this PRIVATE shelter houses an average of 600 animals in aweful conditions but it "should" be allowed because they are under the guise of a no-kill shelter.
Then there was another private shelter on the news just a few months ago. The people where cramming animals in a basement and had so many the animal's living conditions were aweful.
Like I said, most of the time it's all good intentions, but emotions too easily overcome reality and the cold business side of it and the animals suffer. There are worse things than euthanasia, and living in a "no-kill" shelter with living conditions equivalent to a puppy mill, I think is one of them.
Please keep in mind, that I'm not saying this is the case. These people are crazy or greedy, they simply allow the emotional side of it get in the way. I am typically not a fan of no-kill shelters for the reasons above. I applaud their willingness to help animals, they just must be very careful and well thought out in their endeavors. I hope the last of the animals are adopted in this case and the private owner recovers well without allowing this to burn her out.