The fact the "client" wanted a small album shows there is a desire for your images. The fact that they are your selection only or all those shot makes no differance. The customer had expressed a desire for a product. Now it's up to you to fulfill that desire.
One important point to remember when dealing with the public, paying or otherwise, is to look at what your are offering from their point of view.
Your customer has given you a very good lesson in dealing with the public and their perceptions and expectations of portraiture (or wedding etc) photographery. Remember they don't see the different quality between 35mm and 120 (for example) or professional quality or not (no disrespect but they did ask you and not a professional) In their eyes you have a big/professional looking camera and your photos come out so you are ok!
All they are interest in is: do I look alright.....I'm not too dark/light......I'm not too far away/too close......My big nose/ears/head/belly/backside looks ok really......My partner and children look ok...... etc.
The lesson I would take from this is never show or give any prints that you wouldn't release yourself. Since they will try to copy your small/proof prints I would do as suggested already and include a proof of all images for a set fee.
Included in this fee I would provide three minialbums, one for parents, one each for grandparents. ( "don't need that many well sorry that's how they come ." " I can give you two but it will only save you X, a very small amount, three is the best value.") (you get my drift)
Also include the wall photos in the fee and get paid up front and if not, 75% of final cost as deposit. If they wont pay then they are not really interested. The customer must put their money where their mouth is.
BTW the mini album is the best marketing tool you can have. Make sure if will fit into a handbag and keep it simple but expensive looking (not an album from the Euro discount shop0. Every mother and granny will product this album, at the drop of a hat, to show to friend etc. What better advert for your services can you get than this sort of endorsement. Oh and BTW be sure your name and phone number/website is shown at the start of the album.
Sorry for being so long winded but I have been a professional photographer for the last 29 years and I hope I have learned a thing or two about photography but more inportantly how to deal with customers. The easy ones are sublime, the awkward ones a challange but if you can turn them from complainer/moaner/not happy camper to a satisfied customer (they are happy/you are happy) then they can become your best ambassadors.