This is where I disagree. The magnitude of response should be determined by the likelihood of achieving the desired outcome. Sometimes that requires drawing a really firm line, but usually it does not. And I'd argue that it virtually never involves drawing that line as your first strategy.

Like I said, you should absolutely be willing to make that threat, and to walk away, but I don't think there's any benefit to yourself in leading with it. If your initial attempt fails, then try something more drastic until you either get your desired result or quit.

I don't think you can expect people to be rational all, or even most of the time. Just because something is a fact does not mean it is necessary or beneficial to say it.