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I agree with ZTAngel; in our GLO, we have very strict rules about not putting alcohol in anything that has our letters on it. I'm guessing your president and anyone else concerned was worried about similar rules and wanted to keep your GLO looking good to everyone on campus.
As for fixing this, I would try and emphasize to my sisters that formal favors can be re-ordered, and that the champagne glasses, if handed out, could be kept in sisters' rooms, not brought out in front of non-members. To avoid cliques, our chapter tries to organize activities where sisters are grouped randomly and get to bond in small groups (we have a fairly large chapter so this is important) and get to know sisters in and outside of their closest circle of friends.
Good luck and remember: this seems like a big deal now, but in the long run, it can easily be fixed. When this all blows over, your sisterhood will be as strong as ever, particularly with girls as involved as you are working hard to keep it that way.
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