I think you should do exactly what he said, but just the opposite. It's always easy to gamble with someone else's money. They are trying to go the nice route by offering you cd's and whatnot. A "true fan" who would have built a fan site, would probably accept the cd's. When you ask for any compensation (other than renewal fees), you will show bad faith and probably lose it the name to an inevitable UDRP. Guess it depends how nice they are and whether they want to turn it over to their legal team.