@Amanda660
I would be inclined to try to motivate this guest to cancel.
You have a beautiful home and I can imagine the kind of damage a neurotic dog could do if abandoned in a strange place for a long time.
I would tell her that you understand that she is unwilling to crate her dog, but she needs to understand that you are unable to change your very reasonable rules, so she can either crate the dog, take it with her, leave it at a kennel, or, better yet, cancel her reservation and stay in a kennel herself.
(You probably shouldn’t say that last part.)