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Don't worry about it, I'd just move on!! Is there other hotels in the area? You can always post that hotel with others on your website and tell people to book fast because rooms are running out. They weren't trying to shaft you, just trying to make the most of their business :)
That really sucks!! Maybe you can use 2 hotels, give people options. You can block off some room at the one you originally wanted and then find another close one and block some there. And since your bridal party and immediate family will be there all weekend, maybe you can encourage them to take a room at the closer one. Don't fret! If you're still upset, it can't hurt to talk to them. Maybe they can cut you a better deal price-wise for your guests.
I would try to make a small block at that hotel (I mean, do they have 5 rooms? Or maybe just enough for your bridal party?) and then find another one close by for the rest of your guests who will need accomodations.
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So my wedding is in August and in October I called to set up a block of roooms for my wedding (mainly for the wedding party), and was told they don't block of rooms until six months beforehand. Since it was a two night minimum, I figured this was great for the bridal party since we were doing the rehearsal the night before. And this was literally a 2 minute walk to the ceremony site and 5 from our reception! Meaning I would be able to save money by not needing a limo. Anyways, I emailed them yesterday to set up my block and got an email five minutes ago, and they tell me they don't have enough rooms available to set up a block!!
I am so frustrated right now but am refraining myself from writng an email back to them.