OP, while I understand where you're coming from on the whole violation of privacy thing, I think Wallydd is correctly advising you to let that part of the matter drop. It's hit-or-miss as to whether it falls on deaf ears, and could just detract from the very solid case you have on being improperly denied boarding. Besides, you have only your (logical) guess that she was taking a picture, not hard evidence.
As far as EU261 compensation, the legislation is written for oversell or delay/cancellation situations. It wasn't originally intended to cover all manner of "airline-screwed-up" situations, though it has been interpreted by the courts to apply in many cases. I would not be surprised if you could claim it in your case against U2. But the reason the manager never gave you information is because in her opinion it didn't apply. In fact, had your documents actually been out of order (as she surmised), that opinion would have been correct.
What Wallydd is further saying is that your original post is a bit dramatic in how it illustrates the events ("Here's where it gets dumber" "I'm disgusted" etc.), and the relevant authorities aren't going to care. You'll get (deserved) commiseration around these parts, but when you submit your complaint to U2 it should be as bare bones as possible without omitting relevant facts. I recommend sticking to a skeleton pretty similar to the one outlined in Wallydd's previous post.
Again, you definitely got hosed here and deserve compensation. You seem to be a very level-headed person and I wish you luck and success. Keep us posted on the progress.