I'm from Portland, spend every weekend there in the summer. Been to this establishment.
As I remember it the place is real small (imagine a crying kid packed into a tiny breakfast place). She has a small grill (pretty well known food takes a while). Its probably a cook to order place meaning the go table by table and only cook for that table at a time because their kitchen is small.
I doubt the crying went on for 40 minutes like the owner claims. It would have cleared out the entire restaurant in that amount of time.
The Parents are 100% to blame in this situation. As a father of a 8 and 5 year old I've been there. The dumb ass mom didn't have anything for the hungry kid to eat while she waited for her 3 pancakes. (LOL, 3 of them, what 21 month year old could possibly eat 3 pancakes, I couldn't and most of you couldn't, they are HUGE). My kids get one and won't finish it. She has a lot to learn about parenting. Bring a snack, this is parenting 101.
Now, no doubt the owner overreacted. She could have handled it much better. Spoke to them in a civil manner and kindly asked that they give the kid a break outside, distract the kid from sitting in a busy restaurant. Give the kid something to play with, anything but let the kid cry. But she was swamped no doubt, and irritated about the crying, and irritated that the kid needed 3 fucking pancakes.
She will gain some good business from people wanting to eat at a kid-free restaurant!