In Illustrator, converting the CMYK doesn’t flatten anything. In Photoshop, there’s the option of flattening during the conversion, but not in Illustrator.
Flattening in Illustrator (through the layers panel) doesn’t do the same thing as Photoshop. In Illustrator, flattening just consolidates all the layers into a single layer, but it still preserves the stacking order of the objects without changing the objects themselves. In Photoshop, flattening merges everything into a single bitmap. Whatever was behind something else on another layer is gone in a flattened Photoshop file.
Why were you using all those spot colors? Unless you’ll be printing in spot colors, there’s no need for them, and a 27-color spot job would be horrendously expensive to print. If you’re outputting CMYK, just build the color in CMYK.
Will your printer be printing these on an offset press or with a digital printer. If digital, it’s likely best to build and leave the file in an RGB format to take advantage of the larger color gamut that most digital printers have, which will help preserve your brighter colors.
I don’t know what your printer was asking, but I have a feeling you misinterpreted it. I’m not even completely sure of the problem you’re having, but you might consider trying to open the file as an RGB document in Photoshop at a high resolution (maybe 300ppi), then just sending a flattened version of that to your printer. If there’s black type on your image, consider placing the RGB Photoshop file into InDesign and adding the type there. This will keep the type in its vector format while flattening and simplifying the illustration into a standard RGB raster image.
If Photoshop balks at opening all those spot colors, you’ll probably need to go back into the Illustrator file and convert some of them to RGB to get them below whatever threshold Photoshop might have in dealing with them.