Words I've used with success before: "I've got some bad news. I've been running the numbers and based on our current progress, it doesn't look like we're going to hit our release schedule. Now, it's possible that we've just hit a slow patch and we will pick up steam later on, but my experience has been that this rarely happens. Everybody on the team is still really optimistic and we're working very hard to hit the release, but I wonder if we should start to make a contingency plan. For example, if we take this part out and plan it for after the release, I think it will help. If we pick up speed again, we can just roll it back into the process. I really don't want to add any more people on the team right now, because we have a really good chemistry at the moment. I don't want to risk losing time by trying to integrate someone new. What do you think?"

If the response is, "You'd better hit the dates or heads will roll", then respond with, "Of course we'll do our absolute best!" and start looking for a new job.

If the response is, "That's disappointing, but we can't change anything because all of our marketing/whatever is dependent on you finishing everything on that date." Respond with "Of course we'll do our absolute best! Let's see how it goes for the next 2 weeks and hopefully it will get better". Start poking around under the hood to see if there is any wiggle room for pushing things out (i.e. are you being fed BS, or is it really the case that the company is doomed if you don't deliver). 2 weeks later have the appropriate conversation. One time I had to say, "I completely understand the position we're in, but I'm sorry to tell you that the odds of us completing our part of the work on time is extremely low and I can't think of a way to fix the problem. I think we're going to need to work on a new business plan." Basically its realistically discussing the "we're totally screwed" reality. Try to find the best compromise that you can, while looking for a new job in the background :-)

Otherwise just play it by ear. Unreasonable product owners will be unreasonable no matter what you tell them. You might as well tell them the truth. If they are going to flip out, then let them. If your product owners flipping out bothers you a lot (it bothers me a lot ;-) ), then look for a new job.

However, my experience is that when you are not flipping out yourself and are open to listening to the other person's problems, usually good things happen. I don't often look for new jobs when my projects aren't working out as hoped.