If it's a collie it's going to need a lot of exercise and can't be cooped up anywhere for a long amount of time.
Ultimately it's her dog and it's her decision to have the dog and I honestly think you need to vent your concerns to her on a point by point basis rather than just be 'I can't come because of the dog'.
You need to know whether it has been wormed and vaccinated before you go.
You need to know if the dog-poo is restricted to certain areas; if it's shut in one room with access to the outside or if it has free-run.
You need to explain to her that a potentially nervous and flappy two year old and a collie puppy aren't likely to mix well immediately. I think it's worth taking the time to appreciate that neither your son nor her dog are going anywhere and you're going to need a strategy to help them be together (never alone) without a situation turning nasty.
My Nan got a rescue dog recently; house trained but no other training. I made it clear that I loved her dog but would not be introducing my children (4 and 1.5) to it until I was sure I could handle the dog, the dog knew me and that I was in charge etc. Nan also made it clear that she'd rather shut the dog away when they're around than risk the dog hurting one of them. Both of us know that this is a possibility.
It took a couple of weeks of me seeing the dog semi-regularly, walking it, commanding it, giving treats when they were deserved. I then coached the 4yo in how to approach dogs so that they didn't think you were about to hurt them (and of course never to approach another dog without asking the owner first). He met the dog and both he and the dog behaved exactly as we needed them both to.
With the younger one it was more difficult as I can't explain to her as easily and her face is more at mouth level. Also she loves dogs and I have to restrain her from running up and petting every one she sees. But again, we spent a bit of time with me showing her how to be around the dog and getting the dog to understand that she can't leap at her or be rough with her, and again, so far it's fine.
Now, all of us can be in the same space together without it being a drama or anyone getting upset/hurt. We'd never leave them alone together but it's not an insurmountable obstacle.