Failure to progress is often called "failure to be patient" and can mean anything from an unsuccesful induction to a slow laborer to a doctor who had something planned. So I wouldn't take FTP as a sign of doom for future labors. Certainly there are ways to reduce that risk - avoid induction, avoid epidural, change positions frequently, avoid artificial rupture of membranes, avoid pitocin if not warranted for slow labor.
As for the internal monitor after her water breaks and in bed, there is absolutely no evidence base for that and I would question it. The only indication for an internal as opposed to external monitor is that in some cases it is better at showing us variability (the most important indicator of fetal well being). In the absence of complications there is really no reason to put in an internal monitor. And water being broken is not in any way predictive or a risk for uterine rupture so there is no basis in putting one in after the water breaks except that it can't be put in when the water is intact.
It sounds like this provider is not supportive of VBACS. Are there any other options? Is this by chance a big hospital by the lake in Chicago? No matter where it is, I would look at other providers. Call L & D and say you want a VBAC and who should you see. That's really the best way to get the info on who is supportive?
Remember that she does not "HAVE" to do anything. They can make it very difficult on her (and you) but she has the right to informed consent and refusal of any procedure. The tough part is when providers will often call into question the safety of the baby even when that may not be the case. It's hard to know who to trust and when.
Remember that a succesful VBAC is always better for mom and baby than a c-section. The risk of uterine rupture is about .4%. Individual practices vary widely on VBAC success rates so ask your current provider for that info.
Check out the International Cesearean Awareness Netwotk (www.ican-online.org
). They have local chapters and give referrals for VBAC friendly providers.