Well, I did feel I was sort of "lied" to.
1) they offered the rate, accepted payment for it and confirmed it
2) they confirmed the reservation and rate on at least 3 seperate occassions after that- once even insisting (on their side) to resend me confirmations, and made sure I took down the confirmation number
3) they did not fulfill their part of the guarantee which they mentioned.

My friend tells me I'm too innocent and sometimes toooo trusting- I probably am - I have not dealt with any issue like this before...

On a brighter note, in any case, I had dropped a simple, 2 liner email to Travelocity guarantee on this. I got a reply asking me for a phone number, and was told someone will ring me back. so we'll see- anyway, like tennster said...I'm still going to Seoul...! even though I stay in cheap hotels!