Getting Home Warranty to Fully Replace System?

I have a 22yr old system. It's R-22, 12-SEER, Gas Furnace Split System. Home warranty just replaced the fan/motor in the air handler in the attic. Now the compressor just died. Clearly this system is end of life. I am paying for the maximum/extended coverage for the HVAC.

They want to replace the compressor and have me pay out of pocket for the 407c refrigerant. Multiple HVAC techs have told me that's a VERY small bandaid on a gaping wound- it might last a week, 2 months, possibly a year or two... but the coils in the air handler will go next. Then they're going to try replacing those, with me coming out of pocket for the refrigerant again (over $1100).

I have the top tier home warranty with all the wording in the contract that says they'll fully replace the hvac if it becomes unrepairable/obsolete to new standards. Yet, since the tech told them they can 'repair' it... that's all they're willing to do. I get they're a business, etc... but the writing's on the wall, and I'm considering hiring an attorney to get them to honor the contract. Here's the exact wording in my contract:

AIR CONDITIONING & HEATING SYSTEM

COVERED: Electric central air conditioning systems, gas or electric central heating systems, heat pumps and all mechanical parts thereof including: condenser*, evaporative coil, air handler and detached drain lines, ducted electric wall air conditioners, metering device (evaporative coil piston and thermal expansion valve), leaks in accessible refrigerant lines, evaporative coolers, baseboard heaters and radiators.

NOT COVERED: Window units, portable units, chiller systems and chiller components, boiler systems, solar heating, fireplaces and key valves, radiant cable heat, heat lamps, humidifiers, standard or electronic filters, electronic air cleaners, computerized HVAC management systems or zone controllers, flues and vents, transitions, roof jacks or stands, maintenance or cleaning, problems caused by dirty and/or clogged coils, condenser casings, registers, grills, deionizers, pre-coolers, non-ducted wall units, condensate pans, condensate line stoppages, supply lines and valves external to unit, pads or pad frames, automatic or manual dampers, air conditioning with improperly sized systems, and structural modifications required in connection with any covered repair.

LIMITS: $1,500 maximum for diagnosis, repair, or replacement of glycol, hydronic, steam, or geothermal heating systems. OneGuard will pay up to $15 per pound for recharging of refrigerant. The contract holder will be responsible for costs in excess of $15 per pound.

Note: This residential service contract covers air conditioning and heating systems with a capacity not exceeding 5 tons per unit.

Additionally:

HVAC EQUIPMENT INCOMPATIBILITY COVERAGE

COVERED: When OneGuard replaces an R-22 condenser or air handling unit, if any replacement parts become incompatible with the existing equipment due to changes in the federally mandated refrigerant standards and efficiency standards (13 SEER to 14 SEER), OneGuard will pay to upgrade the existing covered air conditioning and heating system equipment to maintain compatibility and to meet the new federal standards.

Note:The Federal Government is mandating the phase out of R-22 refrigerant (Freon) and R-22 air conditioning equipment because of its ozone-depleting properties (see phaseoutfacts.org for more details). In addition, the Federal Government has increased the minimum efficiency standard of air conditioning equipment from 13 SEER to 14 SEER. As a result of these two federal mandates, it is anticipated that air conditioning manufacturers will stop producing air conditioning systems that utilize R-22 refrigerant on January 1, 2015. In its place, manufacturers are producing air conditioning systems that utilize a non-ozone depleting refrigerant called R-410a (Puron) for residential applications. The phase-out of R-22 refrigerant and R-22 air conditioning equipment will have a significant financial impact for homeowners who have R-22 air conditioning systems. If an R-22 condenser or air handler must be replaced, it must be replaced with R-410a air conditioning equipment or components. This will cause existing R-22 air conditioning equipment to become incompatible with any new replacement equipment unless the existing equipment is upgraded. This coverage is meant to cover those upgrade costs due to incompatibility when OneGuard replaces an R-22 condenser or air handler. The retail cost of upgrading an air handler or condenser is over $2,500.

NOT COVERED: Plenum, transition or structural modifications.

What do you guys think- do I have any play here? Pay for a 2nd opinion? Hire an attorney? They're offering me a piddly cashout amount of $1300. Everyone I've talked to says it will cost $3-5k to replace the compressor/refrigerant.Thank you!