Chargeback with Bank and CC. Insist even if it's "outside the normal window". This is a clear case of fraud. Also report it to the FBI Fraud/Internet Crimes Decision. Ignore the Trolls - this is open and shut fraud, even our corrupt US legal system can't get around this one.
Also look into masking your IP. You may be able to get your cash with something as simple as Anonymox for Firefox - if all it takes is convincing some moron CSR your IP is coming from the US. Perhaps you can free your money up long enough to spend it (if you still had any desire to play this garbage game left).
Always hard to say if something is cut and dry anything. I don't understand all of your story because it's hard to pinpoint what's going on behind the scenes without knowing which "realm" (lol D2) you're playing on (thus which AH you're trying to access).
If you're playing on the US servers with your BNet account setup with a US address, sounds like a security issue lockup... but then again, they said you required a region change. Given their explanation of not being able to convert currencies (hence removing any current BNet Balance), it would seem like you're trying to access a non-US server? Or that you have a different country of residence down.
To preface what's to come: I think it's a !@#$ty situation and hope you get your money back in some form.
BNet balance is sort of strange in itself. The way it's valued. It's almost like you give $100 (US) to Battle.Net and it becomes something completely new. And while $1 (BNet) = $1 (US), the BNet dollar has no value outside of Battle.Net. You've essentially just traded your good dollar for something infinitely less useful... at least that's what the agreement makes it seem like. So Blizzard has issues in then taking what used to be a US dollar and turning into, lets say, a euro... mainly because it's no longer a US dollar they're converting. I'm doing a poor job of trying to get something across here, but the point is I don't think Blizzard is actively trying to steal your money.
Given the controversy abroad with the RMAH, I would think that there are concerns with the BNet Balance as well in terms of the interplay between the two.
On the other hand, if you're account is registered under a US address and you're trying to access the US servers from abroad... I'm in the same boat. Heard some horror stories there. Part of any account freezing for anything is usually security related. To protect users from being shafted by foreign parties. Though, this scenario seems least likely given your description of things. More information could help clear it up though.
TL;DR -- Saying that this is a clear cut case of fraud is maybe too strong. The legality of the RMAH and Battle.Net balance is still sort of up in the air... not that the practice in its entirety would be thrown out, but the fine tuning of issues like this is still being fiddled with (unfortunately at the time and cost of the customers).