That said, now I just book exit seats or comfort seats, but when those are full this still happens. Some airlines, like Vueling, I just don't fly with anymore as they made the seats so small that most seats are too small to fit tall people in at all. But they also moved me to exit seats when that was the only flight I could take.
When there are obese people, they are routinely moved to business class (on inter europe flights; never saw it on an international flight) or exit seats; I saw this on Easyjet, Ryanair and BA. I haven't seen your situation occur here; I would refuse to fly to be honest. Just get the pilot out and ask his opinion; they have the last say. If you cannot sit (and if a quarter of your space is filled with someone else, for me that means I cannot sit), the pilot will agree it's not a safe situation for you.
I really dislike flying and I avoid it since it's a miserable experience. And I'm not willing to pay 5-8x the economy rates for what I'd consider a tolerable experience in first class.
I really hope someone makes a website that reflects the true cost of using an airline. So many hidden fees and gotchas. It's a race to the bottom.
I've only done two domestic flights inside the US, one from JFK to Miami, and one from Minneapolis to Seattle, and both of them were utterly awful when compared to intra-europe flights I've done (so similar distances).
See https://twitter.com/i/moments/887384300081098752 for an account of what it's like.