I am following this with interest. I have flown with Ryanair weekly commuting for many years - hundreds of flights. That is a lot of trips, delays, dramas and sagas. I have seen Ryanair operate mostly without incident but as soon as anything goes awry they are disgraceful.
I have though taken them to small claims court in the UK many times and won every time. The £350 fee they threaten is a cut and paste as mentioned in an earlier post. It appears in every defence and is the final scare tactic before the real negotiations actually begin and you will start getting emails from