Yes you are upgraded as a diamond but not necessarily to club level at international properties. If you didn't want to move, you could have certainly taken the upgraded non-club room (and breakfast) for both nights at check-in.

I would have asked the hotel to connect me to the reservations number instead of dialing it myself, they will generally do that regardless of reason at no cost.

Regarding exchange rates on international refund transactions, there can definitely be a slight difference but I have personally decided usually not to challenge them as lately they have worked out in my favor about as often as they have worked against me.