As long as they're saying upfront "no I will not feed those mice, no I will not feed that dirt" etc, I really don't believe there's anything wrong with it. They're not obligated to do it. If I had a dog and believed in slapping it in the face three times a day to make sure it "respected" me, I doubt I'd get any doggy daycare to keep up my training methods even if I was entitled to do it that way (note: I don't specifically know the legalities of periodically slapping your dog in the face, but it's illegal not to provide an animal water at all times in some places. The slapping is likely to be ok in more jurisdictions).
If they're lying and saying they'll do it, that's a problem but if not, it's well within their rights and perfectly sensible. Doggy daycares do not take care of your pet in the exact same way you do. Often it's just for practicality rather than thinking the owner's methods are wrong. I don't think it's out of line for an animal care place to say something if they think the owner's methods are abusive - and in some places denying an animal water for any reason is legally defined as such, correctly or incorrectly. It is of course also perfectly within the owner's rights to never go to that place again for any reason whatsoever.
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