Wow, thanks for all the replies.
I reread this over and over again and am having trouble reconciling the two sentences.
Sorry - that first sentence should read "...unknowingly participated in".
Normally, this is just part of the cost of doing business. About the only exception I can think of, and this highly unusual, is that if both presenter and potential client mutually agree that the cost of this presentation is $_____.
According to the other people I work with, that's just "how business goes" around here.
I'm about ready just to mail the thing off and be done with it. The only question remaining is, "will I ever work for this client again, under any circumstances" and I'm thinking - hey, it's a small town, so maybe indirectly...even though it's not fun to work for her, why burn a bridge...
Personally, I would just let it go, and if the client ever asks for any more work, they will simply have to pay, upfront, your new, twice as expensive charge rate
I'm liking this answer a lot. In fact, I'm thinking I'm out of the compete-on-price game completely.
Image a door-to-door salesman giving you a 15-minute spiel and then, when you politely tell him no thanks, he hands you a bill for 15 minutes of his time?
I'm sensing two camps in web design and creative business in general, because I work with some designers who would *blow* their top to read that.

Here are the two camps I sense:
1. Focus on giving them a good price for a decent site. Sign away all your rights to the client, no B.S. about rights transfer. They pay if they use it, not if they don't.
2. Focus on giving them a fantastic site, state of the art, for a high price. Client pays based on exposure, high/low profile. Client is billed for all contact from the get-go. Sort of like the GAG book-type people.
In my experience, group 2 seems to make more money at this stuff. I say that in as unbiased a way as possible. I grew up with a dad who was in group #1 and my mom always tried to convince him to raise prices, act like the other businessmen. Even the other businessmen tried to convince him