The £500 limit we have seen before, it's not legal and if BA wanted to do something about it (e.g. their own corporate rates) they could. You can safely take that particular point to CEDR, where typically BA will fold relatively early into the process. Or consider the small claims court if that is an option where you live. The issue of not rebooking under El Al, the case law for that is LE versus TAP, the critical factor being whether there is an avoidable overnight stay. CEDR has generally (but not always) upheld this particular case.