Don't do anything in a rush, you've got 28 days from the 18th December to respond, so take the time to get all your ducks in a row, and wait for more experienced forum members to chip in before doing anything.
Having said that, I think your list of likely winning arguments is pretty lengthy, and I would be surprised if they don't drop the PCN before an adjudicator gets to see how much of a mess they made.
1) There's no evidence of any actual suspension signs, just an advanced warning notice. The order says it's only valid at "such times then appropriate traffic signs are displayed in accordance with TSRGD 2016(c)", and that "Parking restrictions will apply when the appropriate signs are displayed", so you will put the council to strict proof that such signs were in displayed.
2) The suspension sign says the restriction lasts "until Monday 29th September 8am-4pm". As the observation time was after 8:07-8:19am, the signposted restriction had already ended.
3) The suspension sign contains incomprehensible gibberish.
4) PCN is for the wrong contravention (see page 1 of this thread)
5) Failure to consider (as their claim that the right signs were in place is complete rubbish)
6) You will put the council to strict proof that "Tree works - Green Space, Cleansing and Gristwood and Toms" occurred after 08:07 on that day. They will have difficulty proving this as it's hopelessly garbled.
As you say, the full £160 is in play, and that's the upper limit if you carry on to the tribunal, so it's a no brainer to fight on.