Update:
Yet another email from Priceline this morning saying that they have determined they have addressed my issues and they are unable to assist me further.
Our records indicate that our Executive Services team has addressed our policies regarding your reservations to the fullest extent possible.
Please understand that these policies are directly tied to contractual agreements with our airline, hotel and car rental partners and are strictly enforced in order to maintain strong relationships with those same partners.
Although we empathize with your situation, we are truly unable to assist you further in this matter. Additional correspondence on this issue will not be replied to. For future reference, your concern has been documented.
So the final resolution from Priceline is exactly what the hotel agreed to refund. I am glad that Priceline was able to do this, but I am disappointed that they are not taking any further action to provide me with a complete refund or remove the hotel from their list of partners.
Now I need to determine if I want to contest the remaining charge on my credit card, and if I even do have a case with them. In terms of value for price paid, I see a partial refund as acceptable. Yet the "quality of services" received by Priceline is not up to par, I believe I am still well within my rights to contest it.
A more detailed explanation of my issues with the property still to come, along with pictures.