Just remember one thing when it comes to grazing the forest with livestock. Most states cattlemen and sheep associations pre date the forest service by about 50years. They were a major factor in maintaining trails and the structure of the national forest before it ever existed. Besides miners and loggers they were the fore fathers of the national forest. Most hired out as outfitters in the fall to clients coming from the east even almost as early as western expansion started to take full swing around the 1890's.
As far as sheep and elk. Elk do not like sheep, sheep dogs, or sheep herders that blast away at coyotes when ever they see them. I would have moved at least a few miles away from the sheep and set up a new camp. When the sheep are still in my area in early September I don't bother hunting around that area. Elk and cattle will interact just fine but not elk and sheep. It's really too bad you hit an area that still had sheep in it. Better luck next time.
Driving elk in bow season? In most places in Colorado elk still act like wild mustangs going where ever the wind blows them. Trying to drive elk into area's or to hunters especially in bow range is beyond insane and near impossible and does not make much sense. That outfitter or rancher is a bit simple minded or the story a bit stretched. All your going to do is drive the elk completely out of your area for a week or so.
Good luck and like said before maybe contacting the forest service to see where the sheep are at would be a good thing before planning a trip. But then again they might not know.