Did you check that w/ the arbitrator?
"The arbitrator may or may not award a mileage deduction for the use that you have had of the vehicle."
In CA once the problem was reported, that's where the use ends, since you are no longer using a vehicle in the condition you purchased it in. it also says "MAY" award a mileage deduction.... if you have spent the majority of the time w/out the vehicle in a usable state, I doubt any such deduction would be awarded.
I have had two cars repurchased via lemon law in the past 4 years. One used the mileage equation you posted, but with the mileage being the mileage at the time the problem was first reported. The other was a cash settlement that ignored mileage offset altogether.