I'd be sure first that's what she has, for sure. Many of these things wind up to not be what a local vet thinks they are.
If I were you, I'd find another vet. I don't think I'd want one that was going to "freak out" over things they find.
It looks like Ghilly's given you some hope, too. If this can be fixed while they have her under for spaying anyway, it shouldn't be a huge cost. She is at an age where she can safely be spayed now too.
Good luck!
The risks of a diaphragmatic hernia depend on the size of the hernia. If it's large, chances are internal organs will eventually find their way through the hole and become strangulated, leading to emergency surgery to save the pet's life. If it's small, the pet can go its entire life and live a normal number of years and never have a problem with it.
I don't know why it would cost thousands of dollars to repair, however. Umbilical hernias are extremely common and are easily repaired, usually when the pet is anesthetized for neutering or spaying. While diaphragmatic hernias are in a different location, and it's a bit more difficult to reach because the stomach and liver block easy access to the diaphragm, it still should not cost "thousands". Find a veterinary college and see what they would charge to repair it. It should be considerably less than a normal veterinary hospital. Also, if you can prove that repairing this hernia would be financially difficult for you, some hospitals have a fund that the vet is allowed to use as he or she sees fit for pro bono treatments and surgeries, and it may be possible for them to do it for free.
As far as how far do you go to treat it, you took this puppy in even though you were basically "full", so it's up to you to either have the hernia repaired or pass the puppy along to a rescue group who will have it repaired and then find her a good home. I know you said that the puppy was unplanned, but the fact is you did agree to take her in, so now she deserves no less than what she needs. Please keep us posted as to her progress AND yours as you look for someone to perform her surgery.
Ghilly