Writer sells story. Editor violates story. Writer is angry. Publisher behaves insanely.
Editing is a skill. Good editors do suggest changes to improve the flow of the text. I don’t know what the original story looked like, so I can’t definitively say that changing the gender of a character or adding creepy, sexualized animal abuse *didn’t* improve the story, but based on the fact that they inserted a grammar mistake in the title twice (once in the TOC, once on the title page), I’m going to give the author the edge here.
Also, if you’re going to accuse a writer of being unstable and writing so roughly it’s unfit for professional publication, maybe you should make sure that your email isn’t riddled with typos.
In my view, you really shouldn’t submit to for-the-love markets absent extraordinary circumstances. When I started submitting my work I decided I wasn’t going to submit to semi-pro markets until I had a pro publication. My reasoning was that if I couldn’t write a story which could get me into a SFWA market, I didn’t have any business publishing yet. The side advantage is you don’t deal with new, upstart publications with more unusual definitions of ‘edit’ until you’ve been around long enough to sort the good from the not so good.
after ever after 
Yikes. I’ve had bad, but never that bad. Yikes, again.