Bond'll Do: I suspect this decision has been made by incompetent middle management. I suggest pushing it up the ladder further, and threatening to "go public". After all, BA did promise not to return the staff travel concession to the striking cabin crew, but they eventually did after pressure.
A few years ago, I claimed for the contents of a suitcase that got chewed up / destroyed (only bits left!) by the baggage system while in transit between LHR and CDG. My ticket was an ID90 standby from a relative who was an active BA staff member. I got a cheque for the value of the contents.
Your scenario seems very similar, although fortunately you got your bag back in once piece.
Good luck!