It says there is a "1.5 mm focus of contrast enhancement present". It was also seen on the the "thin section axial T2 section as well" and is "consistent with a tiny right intracanalicular vestibular schwannoma" . It also says "due to its small size localized inflammation could be considered as well."
Various doctors have told me that the radiologist who read my MRI is highly regarded. He used similar language on my MRI report, so I would read "consistent with a tiny right intracanalicular vestibular schwannoma" as meaning "yup, you've got a 1.5 mm AN". If the drug didn't help, and the radiologist used the phrase "consistent with", that makes it seem pretty likely. Obviously, though, you must rely on radiologists and otologists to make the final determination.
1.5 mm really is tiny, and I bet you are right, if it is an AN, they will suggest watch and wait. In fact it might be too small to treat very easily, since it such a small target, although I bet the Cyberknife people would be willing to try and zap it. It is certainly the case that even a very small lesion can stir up all sorts of symptoms, if it happens to be in just the right place, as yours seems to be.
It is possible that with the PT, you can you retrain your brain to ignore the right side, and only use the left side for balance. This is what happens to many AN patients, sometimes gradually over a period of time, so they hardly notice it happening. Radiation is not as good at fixing balance problems, since it doesn't remove the damaged balance nerve the way surgery does.
The AN, if it is one, will not necessarily affect your hearing right away. You might go several years without experiencing any hearing loss. Each AN is different - mine hit the hearing, but didn't affect the balance at all. You might very well want to watch and wait, if you can manage to adjust to the balance issue.
Hopefully the Mayo Clinic will be able to provide you with some more definitive answers about what is going on, and what your options are to deal with it. I hope something works out for you soon.
Steve