Losers all round as it stands. Buisiness', charities, LCC's reputation, BTR and runners too. If the council has not come back by now, looks like they will not and are settling for their statement 'organiser cancelled not us and we will look for a different organiser' which some will believe and some will not. Whether thay can get someone else in for this year is unlikely as runners will have committed elsewhere before anything can be set up.
Not good to leave it standing as it is. While other BTR races are safe for now, if the council have right of veto over road closures and the half and the santa dash do close roads, will they be safe in the future ? The council will not have liked the bad press over this and with politicians and councils you can never assume.
I would be tempted to now try for a meeting directly with Joe Anderson to try and resolve because it will be his decision. Attempt to find out the specific objections. Go with your plan B but also have a plan C in reserve. If it is to be on again, it will end up as a route that no one is going to be over the moon about but both side can live with at a push because there are no winners there at the moment
This of course may well go nowhere but maybe worth one last shot ?