Can you get a second opinion? How are the vets in your area? Can one or more of them help document this and offer their opinions on the body condition of this poor little mare. If you have more than one vet that disagree with him and agree with you on how badly off she is (and one would think you'd have to be blind to miss it) perhaps you can get him to re-evaluate her and change his position.
I can only compare her to an Arab gelding I took on a couple of years ago who looked not as bad as she does and after several months of no improvement a vet did some more tests (had vet input from the start) and discovered he had organ failure brought on, in the vets opinion, by starvation. We had him euthanized since there was no longer any hope. We did comfort ourselves knowing he lacked for nothing in his last months on this earth but wept for all he had suffered. I am keeping my fingers crossed that little Marshmallow will thrive now that she has kind people in her life.