Another thought: I bet one or more of your local news stations has department that fields consumer complaints. They'd love a story with universal appeal like this one.

And some reassurance: in the case of my insurance problem, I was repeatedly told that their side was legally defensible. It was, and in your case their side probably is too. Nevertheless, you have a counterargument that is at least as compelling. And the bottom line is that neither the dealer nor the warranty underwriter wants this kind of negative publicity, whether it's a black mark on their record with the state or some embarrassing encounters with the local news reporter. You will win.