Though not really too sure if the merchant scammed you (they only get paid what was due in local currency as per their agreement with their local bank) a detailed step-by-step instruction with a template document (suggest Google Docs) to send to the card issuer would be helpful. You should start a blog about this.

The more it overwhelms the system with paperlog will force DCC to end.

In fact, it should be this way. Rather than get all frustrated, just accept that it happens so keep all your foreign credit card transaction receipts until you get back home. If that's not an option for some reason, take a nice clear photo of them on a digital camera.

Then print out template explaining your situation, mail copies of receipts to issuer, then wait for refunds to appear several months later. That alone would accomplish many things: less stress, it'll eventually be refunded, clogs up the paperwork for the local banks not to keep the DCC setting on "for their best interest."