The reason your score dropped is not due to it being settle for less than full balance, its because they reported the account paid and the status date came current this makes it look brand new in the eyes of Fico. If you have an agreement that it would just be marked closed and not settled then I suggest you file a BBB complaint against the collector but if you didnt have an agreement to actually remove the account then I would not do so and instead begin a campaign of GW letters to the CEOs office asking that the TL be removed. Fighting them over semantics, including disputing the way its reporting may cancel any goodwill they may be willing to offer.
If you do have a PFD agreement you would not dispute that with the CRAs but remind them of their agreement and if they dont correct it then you would file a complaint with the BBB for shoddy business practice. The CRAs have agreements with the collectors that they wont remove their reporting once its paid, you would not want to use such a letter against them with a CRA as it makes it harder for the next person to get anything accomplished. Good luck 
