am I missing something?
Yes, you are.
I wanted to take the RUH-LHR sector and bmi refused to allow this without me agreeing to a re-routing 6 hours later in the day.
bmi also refused to re-route me on to the BA flight that would have worked for me.
I offered to get off at London and get myself home, if bmi would refund the money paid for the LHR-MUC segment and bmi refused this too.
In other words, because bmi could not provide me with a flight to Munich within a reasonable time (and I would assert that 6 hours is not reasonable for a short haul journey), they decided to cancel both flights and I had no option but to accept that they did that and make alternative arrangements.
I bent over backwards to be flexible (via MUC at a reasonable time, get off at London and find my own way home) and bmi did not.
No doubt the airline will claim extraordinary circumstances, but if they do I will sue for the EU compensation.