@Roma7 I think the guest is reasonable to not want to have work happening during their stay (that they were not previously informed of), they're reasonable to decide that they do not wish to continue their stay under these modified conditions.
For your part in this, a couple things jump out from an outsider:
A Host should know exactly what is happening at their place prior to guest arrival ( I thought the work was completed before the guest arrived yesterday.)
A Host should communicate at checkin time that a Guest is settled and all is well (Well, today I started getting messages from the guest that the builder was there until 5:30 yesterday afternoon and he returned at 10:30 this morning.)
A Host should maintain control of their home (She insisted that I make him leave, so I did, but he was not at a good stopping place so he left a board up and that said not to use the stairs.)
Once a situation devolves to the point that the Guest has lost all reason, then probably it is best to immediately agree to cancel the booking and make a full refund ( Anyway, then she said that this safety measure was actually in retaliation for them telling me he was there and they now fear for their safety. )
I would get on the phone with ABB CS immediately, since your guest is already gone, right? Ask them to refund the remaining nights, maybe even offer some amount of a discount for the disruption for the first night (half?). I certainly wouldn't be paying for whatever their new accommodation turns out to be, that part doesn't involve you at all.
If I were completely off-site, I would want some way of knowing exactly what was going on at my house: security camera, ring doorbell, trusted neighbor...
You've had lots of guests that have loved your place so clearly you're doing a lot right. Maybe this is about the stairs or maybe it's about something else, but I think there is enough smoke there for you to need to make some good concessions to the guest regardless.