Seems to me you have your bases covered pretty well, but just some thoughts:
a. Definitely countersue for much more than the original suit, if it doesn't scare him out of court, at least you have the opportunity to revisit the case and possibly in front of a more favorable judge, and it ups the stakes for the guy who is suing you, now instead of having to prove his case once, he has to prove it twice. In a 50/50 tie, he loses. If he wins the suit, and you the counter suit, he loses money.
b. In counter suit, file for punitive damages for a frivolus suit, and public defamation of character, which given your prior profession has already been exampled as definable attribute to your identity, and loss of such would be much more than a monetary settlement.
c. In my dealings with city workers, city councils, and city cops...well the brotherhood of coworkers runs deep.,,,However, when the county gets involved there are issues sometimes that involve much more than you on the stand, and the judge could be set against you before you even enter the courtroom. That said, I still think you got a great case.
Most of these cases are just people that want the world to think they have some supreme power over others, and like any other type of bully cry like babies when they get confronted with their own medicine. Go back at him for everything he wants from you times ten, up the anty so he has to prove his case or lose big time, then let the dice roll. I would bet you 5 dollars here, (if it were of course legal) he'll fold up his case long before it ever sees court. (But if it were me I would continue with countersuit even if he withdraws his original, but reduce it for lost time, lawyers fees, and stress.)
Just some thoughts from a bitter old man.