The rescuers I know all operate on the assumption that “foster fails” are a possible (and in some cases likely) outcome and have mechanisms firmly in place to allow foster homes to adopt the animal, often with only a signature on the dotted line.
I can’t imagine forcing a fosterer, who has already passed any requirements needed, to return the animal and then apply to adopt. Not only does that risk situations like this, it’s a waste of everyone’s time.
Foster fails happen all the time. It’s hard not to get attached and if the animal is working out in that home, there is no reason not to make the arrangement permanent.
If I was in this situation I sure as heck wouldn’t be fostering any more of their animals. I’d go find somebody else to work with.