ok, latest update is as follows:
Spoke with a supervisor of Customer Service and he said that they can not NOT honour my confirmation. He said that the confirmation must stand. He is going to do some further investigation and will advise me. I sent him the email exchanges for his review.
I will keep you all informed........
BTW, Lidia did email me back (see one of my earlier postings as I put her response on the BB) and told me that the reservation was canceled but it actually has not been canceled.