It seems to me - based on the facts I read if I assume are all true - that your case is clear. There was copying, and they admitted that. They did not have your permission (you have the "right" to say who makes "copies" of your work, hence the name "copyright"). Merely posting something on the web does not make it public domain or imply your granting of permission to copy, otherwise all of the New York Times online content and Dreamworks' movie trailers, just for example, would be free for me to use. And, thinking that one had the right to copy does is not a defense - there is no "honest mistake" exception to copyright infringement, as there is in other areas of the law.
So that is copyright infringement, and then the next question is what are the damages? One can obtain statutory damages - which is what the RIAA does to music downloaders - without having to prove actual damage, and those can be high, but I am guessing you didn't meet all the requirements for copyright registration before the copying. Even if you get some actual damages, you can collect?
You may well deserve to win a court case. But would that be the worthwhile? If you keep this in the news (or in the Internet commentary whirlwind), you may gain readers and connections that are much more useful than what you might extract in court from a small-time publisher. You probably don't need lawyers or courts to get karma returned to you here.
The demand for them to send a reasonable amount to an appropriate nonprofit was a clever move - it puts you on the high road. The response, while annoying and maybe shocking to you, was entertaining as ever to us Internet-ees and we thank them for being such ill-informed, yet arrogant jerks. As you may have noticed from the proliferation of videos of cats, we like stupid, but it has to be really, really stupid.
As a lawyer, I can go to court fairly inexpensively (except for my time) and sue someone who has wronged me and violated my rights, but most times, I don't bother. It is not fun. Surprisingly, there are a lot of other lawyers out there who will advise people who might have been wronged to just avoid the lawyers and courts. Of course, since I don't know you, you don't know me and you have not accepted my counsel, I am not giving you legal advice right now. :o) [My lawyers made me say that.]