Can you refuse, absolutely, as long as it is not based on discriminatory protections in the law. In other words if they are protected class and that's the reason that you want them to leave. Which is how some religious innkeepers got themselves in trouble, forgetting that hospitality is covered under the antidiscrimination clauses.
Can they write a review about it? Absolutely. Can they sue you based on something in their head that's not factual? Absolutely. It's a very tricky situation. They did pay for the room (assuming that they are paid upfront). Do you have rules about the food? Hours? It's just part of the business that you will have people who will stay in their rooms. I've had writers who have used their room to work. I've had people doing job interviews in their rooms. I've had newlywed couples who after arriving at 3PM have spent two days in the room, only leaving the room for breakfast. Heck, I've had a couple arrive and leave within an hour and a half because they only needed the room for an hour and a half! I've had photographers book the room for the afternoon for a photoshoot. You just never know.
As for changing rooms, that was entirely up to you. In our case, they book specific rooms, they can't change. Unless they are here during a low season, they likely couldn't even ask (or beg) for an upgrade. Our rate changes if they change rooms, we charge extra for single nights in a room.