EU261 is partly applicable I believe. There is no compensation due because strikes are classed as extraordinary circumstances. However, the insistence of Lufthansa to only rebook us on Lufthansa group airlines, or even only on Star Alliance airlines, is clearly against EU261, as I believe airlines must rebook you onto any carrier. This is the sticking point.

The issue that I may have now is that Lufthansa have forced us to accept a rebooking for Thursday with them, but with us flying on different flights. They were insistent that this was our only option. One of us is confirmed on a first class flight MAN-FRA-HND, the other has an unconfirmed reservation in business to fly MAN-FRA-MUC-HND. I have to call back to speak to a supervisor to check that they are able to confirm the downgrade. Since then, we have found other flights that we can purchase for cash on Monday, our original flight day. Am I now deemed to have accepted a rebooking and would not be able to sue Lufthansa to pay me back if I purchased these tickets for Monday?