Given that Jet2 is run by a team of professional businessmen (lets face it these days you have to a ruthless streak to compete) I am not surprised they challenged EU261 as it appears to have more (loop)holes than the proverbial Swiss Flight Safety Cheese. That said, after the number of times it has been tested in the courts, the writing is more than on the wall and for the sake of reputation it is probably time to shut up and pay up.
As for the compensation culture - some aircrew have been getting very tendentious about 261. I can only assume that they have never claimed for a mis-sold endowment or a mis-sold PPI and would never claim from the NHS if one of their family was a victim of medical negligence. 261 was set up to protect customers from rapacious companies, I have yet to hear from anyone complaining about the savings people have made on mobile calls abroad thanks to EU mandates. Thanks to 261 we now have a better service as companies have been forced to put in mitigation plans - Jet2 being a prime example.
However, I think 261 is ripe for review. It was drafted before the locost boom and its compensation levels can be ridiculous. I think the model of the Directive on ferry delays (1177) is much better (and clearer). Compensation here is based on a percentage of the ticket price (and that % rises with the length of the delay); food, accom and comms also have to be provided. On the other hand I would like to see more protection for the customer to prevent cancellations or provide reasonable compensation when flights are cancelled due to 'operational reasons' (ie they are running at a loss). Currently an airline can hold your money for over a year and then cancel the flight with 2 weeks and a day to go and you only get your money back. In one instance a Leeds based carrier cancelled my return leg with 2 weeks and 2 days to go (so a week and 2 days before the outbound) so I had to incur a number of costs to ensure the other elements of my holiday were not lost - a highly cynical move on their part. Again the market has moved on since the early noughties as many more book elements of their independently so IMHO compensation should be mandated.