My view, and it is only a view as i have no legal background whatsoever, is that you have applied the UBR of 29.69% against their UB of YOUR money. It's not linked to whether your account was in credit or not....it's a rate of interest you are applying to the money they took from you and you're using, in their words, an average interest rate which they deem reasonable to charge in the same circumstances.
It's a tough one, and i fully understand the problem you have, however they do seem to be concerned NOT to let this one go to court. If they were constantly basing decisions on a 'commercial approach' then they would pay up every single claim because not doing so is costing them a huge Cobbett's invoice!!!!!!
There is the other side though. You've got an offer of your money plus 8%. Take yourself back to day one when you thought about giving this a go and reclaiming any charges, and think about how you'd have felt if you actually got half your charges back. I think back then you'd take it. The good thing is that at this point in time you're in a win situation.
As with LittleAngel's claim, we decided to take a hit and accept a refund of all the charges before even hitting MCOL. It's like paying a little to save hassle, stress and angst. If i was in your shoe's i'd take it, just for that reason, but of course its up to you. Just thought you'd like to hear what someone else would do.
Good luck mate.