I think you did fine. That lady expects more out of her dog for a treat, but how were you supposed to know that? I bet she felt the need to brag on her dog a bit, and that's fine, she's allowed.
We use NILIF here (works wonders) and we don't make the dogs jump through hoops for anything, but they have to sit before they can go outside, or get unclipped from the leash, that sort of thing. And if I have an extra treat in my hand, I just ask for something simple, like go sit on your pillow, or shake.
Another reason I think you did the right thing is that here you are, a stranger, asking this dog to do tricks. That in itself is worth the treat because it's a much bigger deal for a dog to do a trick for a stranger than his owner.
Niko: American Showline GSD 5 years old
Rosa: American Muppet Dog (GSD/Border Collie mix) 5 years old