Well, whatever happens, you better call and speak to them before March 31, because they're going to cancel it one way or another on April 1. They'd LOVE that excuse to just be done with it.
It sounds as though they do want to chat back and forth with you about this. I actually think the switch to another hotel plus F/B credit is reasonable. Until you talk to them, you're not going to know what their real attitude is yet ("we're terribly sorry and will do whatever is necessary to make this up to you," or "we can't accommodate you, like it or lump it").