Any representation agreement for over $1,000.00 needs to be in writing. If the additional 2 hours was $1,000.00, then one can presume the initial 10 hours was for more and therefore, this attorney has violated state bar rules and should consider him/her self lucky for getting the initial fee without a hassle.
Not a legal answer but, please please please get this lady some help. This is highly anti-social behavior and endangered the children's well being and if they are raised by someone who acts like this, they may well have very difficult lives. I am worried for her mental health and that of the children.
If you KNOW that the evidence used was fraudulent you may have a claim against the other party. That said, apparently you KNEW it at the time and therefore, since you went along with it, you are in a very weak position. That all said, often times these mediation agreements are not well written, ie, difficult to enforce. If you are not happy, discuss it further with your attorney and if still not happy, pay another attorney to review it.
You definitely need to speak to an atty. There may be other issues here like why the car seat buckle broke. After all, it's not a decoration, and then in an impact it fails to work? That's a real problem. Also, it is the insurance companies who are out there telling you that "trial lawyers" are bad, b/c they do not want to pay out proper compensation. I would not be dealing directly with them any further. Progressive is one of the worst insurers for consumer's rights.