To be grumpy with this online distributer?

[DancesWithWoolsEnPointe]

I ordered DDs 1 and 2 items for Rainbows and Brownies respectively 5 working days before DD2 needed hers, which was 16 working days before DD1 needed hers. The items were marked as being in stock. I paid for premium overnight delivery. Most the items arrived the next day - with a note that said: Sorry - these 2 items are out of stock, they will be delivered in 10 - 12 working days. Unfortunately this was the Rainbows T-shirt - so DD2 had to get enrolled in a school shirt. The other item is DD1s Brownie sash, which has still not arrived 16 days after the order was placed. She will presumably have to get enrolled tonight with no sash. Is it unreasonable to expect that if an item is marked in stock, that it is in stock, and that if they cannot deliver something overnight, as I have paid for, I should be offered a refund?

Absolutely NOT unreasonable. If an item is advertised as 'in stock' then it must be in stock, otherwise isn't it a form of false advertising in order to get your money from you? Did you order it from an online shop or site, or direct from a distributor?

Its an online shop. I'm preparing to draft my strongly worded letter.

If it's the site named after a particular south American rainforest and river, I'd recommend cancelling the order. What will usually happen is that they'll refund your money but still send the product out. Then it's at your discretion whether to return it or not.
If a different shop, good luck with your letter. Bad press can sink online shops and they know it.