FlyerTalk Forums - Compensation for long delay/cancellation on *A reward ticket

My wife & I booked *A reward ticket with USAirways points for the following itinerary on LH:

CLT > MUC
PRA > MUC > CLT

PRA > MUC was cancelled due to mechanical failure (overheating engine) and after 1 1/2 hours in line, 1 hour at the ticket counter, and a re-route PRA > FRA > IAD > CLT we landed more than eight hours later than our scheduled arrival.

Reading the EU Passenger Rights documents it appears we are eligible for compensation:

Right to compensation

In addition, if you are denied boarding, your flight is cancelled or arrives at its destination more than 3 hours late, you may be entitled to compensation of 250 - 600 euros, depending on the distance of the flight.

If the carrier offered you an alternative flight with a similar schedule, the compensation may be reduced by 50%.

Flights within the EU:

1 500 km or less: 250 euros
More than 1 500 km: 400 euros

Flights between an EU airport and a non-EU airport:

1 500 km or less: 250 euros
1 500 - 3 500 km: 400 euros
More than 3 500 km: 600 euros

However since we booked with miles rather than paying cash I'm not sure how the compensation or refund would work. Anyone have a similar experience and can share how it worked out? Would I be better off calling *A or contacting LH? I'd be happy either getting the $$$ as listed above OR with getting miles returned to my Dividend Miles account.