P.S. It would be interesting what stance they would take to you being named as co-owners of any IP developed, and royalties paid for any further use beyond current project. My brother is a mechanical engineer and original designs in his lab always have him as a registered patent holder.
Reminds me of when I was outright sued over a YouTube video on my channel - twice.
It doesn't matter how many "thousands of successful milestones and payments without issues with the terms," there is a vital flaw (in their favor) with said contract.
Contracts are easily done on a case-by-case basis, and dubious clauses are routinely renegotiated.
All of this is irrelevant however when even the lawyers won't answer a simple contract law question. I won both of the suits mentioned above by proving their position to be indefensible.
Which I believe you have done. Keep your integrity, your current and future clients will recognize it.
No one manages his money as carefully as his own. If you were as clear and succinct in your description of the situation to stakeholders as you just made plain here, and they were willing to pay for the chance of success or the effort toward success, the project should have gone forward.