A follow up and response - the short answer is I was able to get this resolved

ao40 - after your suggestion I did follow up with the hotel, they showed both rooms cancelled and couldn't really help. Interestingly they kept saying "let me look some more" until they just didn't come back so they seemed to really want me to end the call rather than them.

joe_miami - I do use more inflammatory language on a board than in real life...I am a full believer that you catch more flies with honey than with vinegar...unfortunately we live in a world where stronger language on a board tends to raise readers interest more and therefore warrant more responses (hopefully helpful ones)...

In the end a third call to customer service connected me to a customer care agent (I believe that was how she referred to herself) . She claimed that her group was where elevated issues were pushed to - I'll never know if this was true but she clearly knew much more than either of the other agents on the "Diamond line". On a side note I have been Diamond for several years and never realized Hilton had a separate Diamond line until about 3 months ago - Certainly doesn't feel as smooth as some others (I use Deltas Diamond line extensively with much success). Anyway she could see where the transaction had gone wrong - and apparently someone had done something odd after the first call to make it even more complex. She was able to transact it immediately and return the full value to my account. One side note she did say it shouldn't make a difference but if point transactions are made for each room (so they have separate confirmation numbers as well as certificate numbers) - this seems not to happen. Sounds like this isn't the first time the system has hiccuped with one confirmation number and multiple point certificate numbers - I'll certainly book differently going forward...