It is the duty of the observers to challenge ballots.
It is the duty of the election workers to record these challenges, which wasn't happening.
The only reason her challenge should have been denied is if she was shown to be challenging ballots indiscriminately or she was preventing the election workers from doing their jobs. To my knowledge, there has not been any evidence that this was the case.
Challenger rights are detailed on page 28: https://www.michigan.gov/documents/sos/XI_Election_Day_Issue...
It is not the Trump legal team's responsibility to prove that this woman (and the others like her) was impartial. Their only obligation is to provide a "preponderance of evidence" that supports their case. Given the large number of affidavits that their team has provided of a similar nature, it seems reasonable that the case should be allowed to be heard in a manner that takes both sides seriously.