In regards to the above story, I eventually received radio silence across all LH channels. I submitted a request for compensation for the lost item (as per LH F phone line), and they quickly emailed back that since it wasn't reported within 7 days (it obviously was), they can't provide compensation. After telling them it was reported, they said "too bad", and provided two links to alternate dispute resolution websites.
Any advice on this? I'm kind of tempted to take it up in US small claims (since I'm most familiar with that) but was wondering if the EU solutions were easier.