The only advice I give is to get an attorney who understands your situation, especially if you have a profitable business to protect. Your time, sanity, focus and assets are at risk.
If it were me, assuming I used the image and did not have a license, I would cry hardship and make a modest offer. Maybe they take it and I get this behind me for cheap. If they don’t take it, at least I won’t look bad in front of the judge if they file a lawsuit because at least I made an effort to resolve the claim. The less attractive option for me is to not give it another thought and move on in hopes they do not sue, I like piece of mind.
I do not know many lawyers who send things certified anymore, especially in the age of email, when it is easy to verify if an email was received and opened. Likewise with the POA, it is not even needed unless they are signing the release on behalf of the client.
Best of luck to you.