Tell her that if you were set that bird free, he will surely die either of the diseases other wild birds and other animals carry, or he could be attacked and killed by a bigger bird or another creature. Does she really want you to sentence him to a life of pain, starvation, sickness and eventually death? If she does, she clearly has no respect for animal life, and honestly, if I had someone living in my house like that, I would kick them out pronto!
Also, he's not accustomed to having to search the wild for food, nor is he accustomed to be half starved (well, starved compared to the good constant food he has now as a pet). The dangers are overwhelming if I was to make a list of all the dangers. He hasn't been brought up by wild birds in the wild to know exactly what animals are ok to be around, and which ones to never ever go near! (like my bird who recently got lost, she went to investigate a cat and got attacked, luckily she escaped unharmed).
That woman would drive me INSANE as well! They are the 'guests'. If they can't handle your bird, then perhaps they should find somewhere else to live. Have a good talk with your parents, you are 18, therefor you are an adult and have the right to be able to keep your pet bird. Especially if it's just these 'new-ish' people who have an issue with it. You were living there long before they were. They cannot move in, and then demand you release your pet because THEY don't like it.
Try to ignore that woman as much as possible.. otherwise you'll just get so angry and frustrated that you'll go off your head at her one day when she REALLY crosses the line..if you're like me that is. ^^