" I was all set to rehome him to a pet home, but his breeder blocked me and insisted that he be returned to her. "
do you co-own the dog ?
once you own the dog it is your dog. she did not share in your medical expenses. I assume you are cutting your losses and not asking for some health quarantee to kick in.
I can definitely see where a breeder will want to know how their young stock is doing -- just for their record of what they are producing to make other or better choices in the future . I can definitely see where the breeder would be concerned about where the dog is being homed to so that the dog is not treated as some flawed disposal object and given to anyone . I do not in one second think that would be you. I see caring and concern for the dog.
neuter the dog