Kid's Book Update

So, I finally got a note back from my editor on the kid's book project. Sigh. I am left feeling about these publishers pretty much the way I did before -- good editing advice, coupled with slightly weird people/organization skills. She would like to continue working with me, but has suggested a fairly major rewrite. In addition she made no mention of the "competitive" book she talked about previously and sort of threw the ball into my court to ask if I would like to continue the project, as if I had been the one balking previously. (Which I suppose I was, but only 'cause they started it. Nyeanh nyeanh nyeanh.)

Anyway, I am left with the following array of thoughts:

● Wow, the edits are really great suggestions -- and I crave good editing, since I think so many people just read and go "hmm, no spelling mistakes, it must be ok!"
● Except they kind of go in the opposite direction of the last set of edits, so that's frustrating to have to redo this in a completely different way when I already did a major rewrite based on her suggestions. I realize that sometimes a major rewrite doesn't get you to a finished product, or even to "just a few refinements" stage . . . but it's still tough to have done what she said the first time, and now have to go undo it.
● If I put in the work for a major rewrite (still not having seen a dime, mind you) will I be waiting ANOTHER year before I hear back from them?
● Why no mention of the other competitive project? It makes me feel like that was just a quick excuse offered me and not the real issue.

I have not yet written her back, since I always like to take a few days to let the conflicting thoughts (which in this case do have a bit of crankiness to them, of course) settle. But I'm not quite sure what to say. I think I would like to continue, but I want to write a "but are you realio-trulio going to make me a priority here?" kind of note. I have also received a suggestion that I tell them I'll go forward if they give me a quarter of the money before I do so -- sort of a good faith check. I haven't discussed any of it with my agent yet, which I should probably do. . .