Nearly 4 months later I finally got a final resolution to this baggage saga and thought I'd update this thread with the outcome as the compensation part I think might be instructive as relates to "reasonable" compensation.

I did finally get my bag back 4 days later at LHR on my way home, they finally "found" it but by that time it was the night before I was to fly back to the US and they couldn't deliver it to the hotel before my flight the next day so I just retrieved it from LHR before my flight home.

Compensation for this event is what ultimately took a lot of persistence and time but ultimately worked out in the end. I was in London specifically for my quarterly martini and dinner trip, where I attend some of my favorite restaurants all of which have fairly smart dress requirements. Given this in my view, I required replacement clothing that was in line with the venues I had planned to attend and which I otherwise would have had but for not BAs screw up. To that end I bought appropriate replacements as frugally as possible, day by day, that were commensurate with what I had intended to wear (~150GBP/day) plus normal necessities (socks/underwear/etc). I had a nice shirt I wore on the plane and used hotel laundry for one day to minimize the cost but for the 4 days my claim was just shy of 500GBP. Now I'd heard that BA seems to think ~50GBP/day is "reasonable" and had I been in Cancun and needed some swim trunks and a tshirt I'd agree but that wasn't the case here. I submitted my claim and got a reply about how backed up they were and how it might take awhile to respond. Simultaneously I also submitted a claim to Chase travel insurance (Chase BA Visa) which had a $300USD limit for delayed baggage which I figured would fill in what BA wouldn't pay as I expected them to balk at the amount of my claim. The thing was Chase wouldn't pay until they knew what BAs position was and what they'd pay (totally fair and expected) but BA wouldn't respond at all, literally many emails and request and nothing. The adjuster from Chase even emailed them twice but nothing...so finally after the required waiting period I filed a claim with CEDR. That was accepted, and after some time BA responded and agreed to pay the full amount so CEDR was closed....but they never sent the payment so fast forward 20 business days later I reopened the CEDR case explaining they had not actually paid and finally a couple days later BA replied, apologized said they would send the payment and finally today (4 months later!!) I got the bank transfer.

I can't help but conclude they are hoping for "breakage" on compensation, there's really no excuse for a delayed baggage claim to take 4 months and I firmly believe had I not been tenacious about this I'd have never seen a penny from BA. Also had it not been for FT I'd have not known about CEDR (thanks! and that's a great system.) and probably would have just given up or pressed Chase to give me the $300 and called it a day.