You're asking for an opinion and personal experience, so that's what you'll get.
Personally, I don't believe it's necessary for 3 year olds to speak the language of the country they live in to go to school. On my first day of kindergarten, I only spoke French. I could follow and imitate the crowd, though, and learned new words every day. By first grade, English became my primary language even though we had to speak French at home.
It's even less important to understand the language at 3. The kids do need to be able to tell the teachers when they have to go to the bathroom and a few other things like that, but not much else initially. Kids are remarkably good at reading a room/following the crowd.
If this is a private preschool, there really isn't much you can do about it. If it's not, it may be worth fighting for. Please remember, though, that if you are in an adversarial relationship with the teachers, it may not go as well as it otherwise might for your kids. If it's just the administration, and the teachers are open to it, it should be fine.
About being bilingual, though, my experience is that unless there are extended periods of time where the children need to speak the native tongue of their parents, or a lot of their friends speak Spanish outside the home, they will most likely lose a lot of their Spanish. Kids tend to speak in the language of their friends/classmates. Some parents are successful at keeping their kids enthusiastic about their first language, but it's a whole lot of work. Although I don't remember being angry with my parents for sending me to school unprepared to understand, much less speak, English, I do remember (to this day) being laughed at in the lower grades for mispronouncing unfamiliar English words on my spelling lists (e.g. I pronounced "Yo-se'-mi-te" as Yose'-mite: 2 syllables.) It embarassed me. I consciously rejected French for decades after that (not sure why, exactly. I love the language now.) So you might want to consider if speaking a bit of English at home is worthwhile.
The neighborhood I grew up in was made up families with many different countries of origin. Most of my friends' parents spoke with a heavy accent, be it Polish, Italian, Czechoslovakian, Hungarian, French, etc. My friends slowly lost their fluency in speaking their parents' tongue, but could understand the language without trouble. As an adult serving a community which was 25% Hispanic, I had contact with many young adults who, if born in the US, couldn't speak Spanish, but could understand it. Sadly, it happens. The YAs who spoke Spanish most fluently were kids of those who could not or would not (out of embarrassment) speak English, and thus needed to act as interpreters.
