I am not saying this is definitely going to be successful, but the law does not specify that your final destination must be part of a linked booking. It simply states that they are obligated to pay to get you to your final destination.
The airlines are up in arms about the effect this is having on them and are seeking government compensation. BA have now spent almost $200m in compensation to passengers and Easyjet are claiming it has cost them almost $80m. The regulators are taking a hard line with the airlines in forcing them to apply this law, and even Ryanair have backed down and agreed to pay.
Here is the law in full.
http://eur-lex.europa.eu/LexUriServ/...01:0007:EN:PDF
One thing I would also point out. Do NOT accept compensation offered by another jurisdiction, ie under US DOT rules or those of another country. Once you have accepted this, the EU rule no longer applies. If you are travelling on BA, you will almost certainly be entitled to far more compensation under EU261/2004 that IN ANY other jurisdiction.