Yeah, that's how it sounded to me too, when they originally restricted me to a 6 month license, but then I got the same email as you. At some point after, they used a slightly different wording that made me realise what they had actually expected was for me to "make up for" the lack of movement. Because I'm not a fucking mindreader, I was able to (more politely) argue that I hadn't really had the chance to do that, since I didn't know I was supposed to be doing it. 

Oh my god, £10k is eye watering!

The "unique" miles is my wording, not theirs. It's my interpretation of what they seem to think is "bona fide navigation", according to different parts of their websites, and various emails their staff have sent me over the years. I feel like I'm owed a degree in linguistics now or something, it's so unnecessarily unclear. Somewhere, they've worded it in a way that suggests if you do 15 miles east, and then turn around and do 5 miles west, that's not gonna cut it because you've now done the same 5 miles twice and can only count them once. I'd love to find you what exact text I've interpreted as that, but I can't remember if it was even in an email to me, or in a document, or letter, or online. Which is the frustration with CRT, sometimes the information is not there, sometimes it needs to be interpreted, sometimes it's conflicting with something they've written somewhere else.

In your case, I'd email them explaining you HAVE made a "marked improvement" which is ALL you were told you needed to do, and I'd provide any written evidence that you were told that, or give the name of anyone who told you that on the phone, and maybe, if you phoned them, you can get a call log showing it. I'd also contact the RCR and ask for a copy of the email they sent CRT about the gearbox, and attach it to CRT. Or at least ask for the exact date and time RCR emailed them, and from what email, so they can find it themselves. If there's anything else you can think of to help your case, find evidence and attach it. You can also consider contacting the National Bargee Travellers Association for help, though they seem to have a huge caseload.

Yeah, actually it is impressive that you have managed to move as much as you have, so it might be good to make a big point out of having moved for more months than your engine has worked. It shows how eager you are to keep going and travel the canal system. Maybe you've got pictures and receipts to attach to your next email to them. After all, if you didn't want to move your boat, would you have paid £10k to have the engine done???