What if she comes back to check if the leaflet is on display in the library? How would your tactfulness have worked? She could complain she was led to believe her leaflet was accepted. In a way you have duplicated her lack of transparency by not being upfront with her.
You should have told her at the time that all submitted leaflets go through a library vetting process to ensure they are relevant for the intended audience. Or if you were concerned that your confiscating her leaflet could come back and bite you, you could have taken it to a supervisor and explained that in your view the leaflet was primarily religious literature and not about sign language.