This reads a bit like a 'how not to do
PR' nightmare!
My personal view is that if this sat within my area, I would be making a quick phone call to the MOD press office in Main Building, advising them that right now there is the making of a wonderful tabloid story on this website, and that unless something is done PDQ, then the RAF is about to be seriously publicly embarrased and its all its own fault. I would suggest that some fairly quick damage control is needed now, as this is the sort of story that Tabloids love, and will enjoy running (particularly if they can do a 'it woz the sun wot won it' angle).
Rebrief the key people now, get them in over the weekend if needs be to find the items and then get someone suitably (i.e. very) senior to turn up at this gentlemans house and present him with his belongings in person with a full and unreserved apology.
People are always busy, but in my book, anything involving individuals who served us at our time of greatest need goes straight to the top of the 'to do' pile regardless of what else is brewing. We owe them a debt we can never repay, and shabby treatment like this is a disgrace.