I have no issue with turning away the diver described in the OP from a liability perspective. I think it was the "right call" from an insurance and business perspective.
That said, over the entire time I've been reading scubaboard, I have seen a profound elitism, from the OP and some other posters, with respect to non-professional divers that would drive my business away from any of their respective shops/services. I doubt this elitism comes across in real life the same way it does on scubaboard and I'm sure these folks are very fine people that have the best of intentions. I would just like to point out this behavior in case they are unaware of their apparent elitism.
In nearly every thread I've read regarding training of any kind or incidents like the one described in this thread, these posters invariably argue that doing ANYTHING without "proper" (read paid instructor) training is bad bad bad. Diving to 130 with an OW cert? Bad. Diving swim throughs without a cave cert? Bad. Diving with uncertified divers? Bad. Diving doubles without a class. Bad. Diving old regs that aren't serviced by a pro. Bad. Pretty much anything that "requires training" should only be done with a certified pro, at least according to the opinions I've seen these folks put forth. That's fine, advocating a professional instructor. I am okay with that. What I find "elitist" and incredibly frustrating (and naive) is the fact that there is no middle ground for capable persons who aren't certified. For those who are, for whatever reason, comfortable in the water that can handle the skills immediately and grasp the physics (it's not particularly difficult for most people) and who actually remain active divers, progressing to more difficult diving (or passing on skills to other people) is natural and easy. To assume that those of us who are not pros are incapable of teaching is ridiculous to say the least. To imply we're somehow less safe in teaching is similarly ridiculous.
Using phrases like "Why are these people so willing to risk the safety of their loved ones?" is fear mongering at best. We all assume risk on a daily basis. I assume more risk driving my kids to school every day than I ever would putting them in a pool on SCUBA.
I understand coming from the perspective of doing things safely. I've been teaching "potentially fatal" activities for 20 years. SCUBA isn't to be taken lightly, any more than any other dangerous activity but let's not pretend that the dangers are more than they are, especially for OW diving in relatively benign waters.
As the annoying meme goes here on Scubaboard says "You don't know what you don't know." Stop assuming you know someone's capabilities simply because you think you know their certifications. Stop assuming that because people don't have a pro cert they don't know/understand what the risks are. Don't make the same mistake you're accusing them of making.
Dump the elitism and find a better way of servicing your customers.
/rant