Although I can see Leesa made an effort to phrase her concerns "politely," what she is asking is not polite, and Sheila would not be rude at all to pull out of hosting the shower.
"Leesa, thanks for getting back to me about the shower plans. Unfortunately I can't accommodate the changes you want, so I'm going to have to rescind my offer to host. I wish you the best."
If I were Sheila, I would pull back completely, and not host the shower even if Leesa changed her mind and said the original plan was fine, or that she would augment it at her own expense. A 25-person shower already seems to me to be somewhat on the large side, and the original plan was perfectly polite. Leesa asking for such a big change would put me off hosting anything for her.
As an aside... It rubs me the wrong way when someone offers to host a shower for someone because they feel sorry for them and see it as their only way of getting necessary items. Aside from my personal feelings about people's responsibility to take care of themselves and the children they bring into the world, it really sets the stage for a lot of guilt on the part of the host and clouds their ability to make good decisions. Someone like Sheila may end up thinking she has to accommodate Leesa's changes, no matter how much stress or expense they cause her, because what will become of Leesa if she doesn't get this shower? How will she get along in life? And that's not really a burden Sheila should take upon herself--the first step may be dropping that mindset, so she can look at Leesa's response with a clear head. Just IMO.