I work in a council housing department, nutty, and really sympathise with your plight. I do not know how the allocations team make decisions here, whether they do bend the rules or not. As I've said elsewhere, people who are accepted as homeless with dependents are first in the list. Even if you are top of the points list, homeless people come first, according to the rules. If the housing situation is getting worse in your area, people with lots of points stand less and less chance of getting a new home. It is very frustrating, and many council staff are not happy with this state of affairs either.
I do know that is it soooo diffucult to get straight answers sometimes. I come up against this time and time again, since my work means I have to liase with different teams in the housing department. People just don't want to put their heads on the line.
I agree with you - as it stands, according to the rules, your chances of getting a 4 bed house are slim. I think you have to find a way of accepting this, so you won't be too disappointed if the answer is no. Keep on fighting, tell them what a good tenant you are, write letters, but take your story to other housing associations, look elsewhere. Don't spend all your time and energy fighting for this house.
I don't know whether to recommend this really, but council and housing association staff IME are very worried about attracting bad press. The housing association would not want to risk a critical newspaper report on how their housing is allocated. As you know the house so well, you'll probably know who gets it - how many children they have etc. You could consider telling the HA staff that you will inform the press of your situation if you feel the allocation is unfair. But this might backfire on you, especially if the family who get the house have a better case than yours according to the rules.
Alternatively, what you could do is keep a record of the lies and 'u' turns you have suffered, and threaten to tell the press about this. That might at least stir the staff into giving you a united decision, but it still won't necessariliy get you the house.