Outrageous! When someone is redundant it is the job that is 'at risk' and then redundant, not the individual. Clearly your post is more than'at risk' as you have been told it no longer exists!
Sounds like they may not have followed a proper procedure, and as mentioned before you definitely do not need to accept any alternative post offered to you unless it is 'suitable', and being shoehorned into a demotion with a large salary cut on the horizon is not 'suitable' in anyone's books.
The legal advice you have been getting is correct, definitely stick to your guns. I would write a formal letter to the HR Director explaining that as you have been told your post no longer exists, it is therefore redundant. You have been offered an alternative post which you do not consider suitable, and therefore will not be accepting. As a result instead you are claiming whatever redundancy package you are entitled to.
I would then say that you are also concerned that they have not followed the statutory procedure in handling your redundancy situation - you did not received written notification explaining the reasons and inviting you to a meeting, you did not get a meeting to discuss it at which you should have been entitled to be accompanied, and you have not been officially notified of your right to appeal. (assuming this is all correct).
If you write formally like that, stating you do not accept the alternative and pointing out where they have not followed the procedure, that should (hopefully) get you a better response, and gives you a basis for a grievance should you need to bring one.