Your reps were against the NtO you say you received, so the discount option is lost at that stage, although many councils do re-offer it to avoid the PITA of having to prepare an evidence pack for London Tribunals. Obviously Islington like to play hard-ball.
With no discount, it is now a total no-brainer to appeal to London Tribunals, although I can't see that you have a particularly strong case, altough others may differ on this.