I agree about The Paddock, I use to buy from them because they were the closest to me, thus being the fastest shipping. Well, no more. The quality of the parts weren't too bad, but there customer service blows.
Anyway, I feel you are totally justified in the way you handled things though I don't know the manner in which you conducted yourself, which would play a huge part. I myself have never ordered from CJ Pony Parts. When I find a good place, I stick with em(Mustangs Plus and Mustangs Unlimited). But being a business owner myself, you HAVE to satisfy the customer when the problem is brought up, to give them piece of mind. None of this, "Let me talk to so and so and I'll get back with you." If they value your business, they would have fixed the problem the first time it was brought up. I had a very similar problem with The Paddock, though I didn't go to the extent of a lawsuit(too troublesome and I'd probably be losing money in the end because of lawyer fees). But being on both sides of the track(as a business owner and as a customer who has been screwed over), I'd say you are completely right.
But the way in which you conduct yourself does in fact play a role, and I don't know the details of that. But when someone gets smart with me, I won't give them as good of a deal as someone who stays calm and treats me with respect. If I screw up, I admit my mistake and will resurrect it, and I expect them to be a little angry, but as long as they're cooperative, they get the solution that satisfies them. I use to work for a place that trained their employees to actually ask customers with problems, "What can we do to make you happy?" And I think that is great, because the customer should come first. And if you want a good reputation and increasing sales, then you have to put the customer ahead of all else. I'll get off my soapbox now, sorry.