I was talking to this girl I was with in a group of friends. We were out having some drinks and just talking. This girl mentioned that she was went to school for ballet".

I did the whole "oh, you're a dancer, I can't talk to you anymore"
She says "What?, Why?"
Me: "Why what?"
Her: "Why can't you talk to me because I'm a dancer?"

I was completly lost on how to handle this.

Well what did you say?

I would have gone with something like this:

"(story mode) The last time I went out with a ballet dancer I took her out to an expensive restaurant (name drop here). I told her to order whatever she wanted. I had the steak, she ended up getting the veal. An hour after dinner we're at her place drinking wine and she excuses herself to the bathroom and I hear 'blaaarrggh' through the bathroom door. She just threw up all the veal I just bought her! To top it off, she came out of the bathroom like nothing happened, and wanted to make out!~"

This story works on a couple of levels because:
1. It shows that you've dated women in the past, presumably attractive women since the girl was a dancer. It lets her know you're not some sort of loaner freak.
2. It shows that when you date you take women out to nice restaurants, letting her know you're a classy guy with good taste.
3. It shows you have money to take women out to nice restaurants.
4. It's a stereotypical neg on ballet dancers, therefore an offhanded neg on her.
5. It shows you can tell funny interesting stories, and you're not embarrassed to talk about girls you've dated in the past.

And then it opens up the conversation for all sorts of directions to go. Restaurants, bulimia, dancers? But that's just me. I like telling stories.

~Antithesis

man, that's good. I was TOTALLY at a loss for words, so I just turned to the friend on the other side of me and started talking to her before she did the same to me.