If you had purchased her ticket with miles from your account you would have been golden as she would have inherited all your benefits regardless (however this is going away this year..) Purchasing a ticket with real dollars for someone else under your account is pretty much meaningless unless you are also on the same PNR.

Strictly speaking the agent was correct and your wife was not entitled to the baggage allowance. In actuality I don't think the phone agent needed to place your wife in E+ for free either so I think you got a favor in that regard. All that said I would think the agent should just make this work for you, however I suspect the initial dealings with Airserv shot you in the foot to start with. I probably would not pursue a refund here since it wasn't a benefit you were actually entitled to, but you could certainly provide feedback about how you were treated during the situation.

Did you have 3 bags? If not why not just put her bag(s) under your name?