Dear Joseph,
This is exactly why I don't do Instant Booking. I would turn it off. Don't let Guests break your house rules or airbnb's contractual agreements. The sooner more Hosts quit letting Guests break rules, and manipulate Hosts asking for one thing after the next, the sooner Guests will quit trying to break the rules. So far you have gone out of your way to accommodate this Guest and yet they keep trying to bully you. Do not cancel this Guest, make them do it. Do not correspond outside of the airbnb platform, call airbnb as well. Can you imagine what they would be like if you allowed them to be a Guest in your home/listing?
Do not ever be afraid of a bad review, simple, short but sweet comments like............"Guests broke Host rules and airbnb's contractual agreement, therefore they should not have been able to post a review." You don't need to go into specifics as this just gives the difficult, rule breaking Guests something to respond to. Keep it factual, short and sweet. Bully's are cowards.
Good luck and Happy Hosting,
Eloise at Happy Trails