I think you have handled this remarkably well op.
You would be well within your rights to just cut off all communication and favours from now on. If you think you will be content with that then I think you should choose this option.
I think we are quite similar (I agree with all of your policies about not being petty etc) but I don't think this makes you a pushover. You are setting a great example to your daughter to have your own standards and not sink to someone else's poor behaviour. Being kind and compassionate is not a weakness.
In your shoes now I would probably make one last move - I'd message that things have become very awkward and we clearly need to talk. I would be very clear on what I wanted to say during that conversation -
I am surprised at your response to my initial request and what has happened since then. I would like you to explain to me. (And do listen here - it is abundantly obvious you are in the right but maybe she just cannot cope with life at the moment and is not thinking clearly).
I feel hurt and taken for granted. I have done you favours for two years and was happy to do them but now I feel you don't even appreciate the lifts. I have never asked you for petrol money.
I WAS happy to continue with the arrangement on the basis your Dd came to me. A fifteen minute walk is not unreasonable particularly as I've been adding X amount of my time to collect her up to now. You took your Dd to the club last week and did not offer to take mine to give me a break.
I have found the subsequent involving of my daughter incredibly distasteful. If this isn't continues I will have to contact the school as i consider it bullying.
I wish it hadn't come to this but I don't see a way forward now. As I said at the beginning I feel hugely under appreciates and taken for granted. If our lift arrangement was coming to as end I would have expected that to be with a "thanks for all you've done so far..." expression. I assume it goes without saying that you are making other plans to have your dog minded?