First ever screaming match with my Chinese FAO

I'm not 100% but I think the release letter is only important if you stay in the same city. If you move provinces, no problemo. Either way, I'd try to get it from the loving guy.

Letter of Recommendation means two things; diddly and squat

I will back up Dragonsaver on this. You most definitely need a release letter after completing one contract at a particular school even if you are in a different province and that contract was completed. It has been this way for almost four years now. This is not to say that some schools that have a palm greasing relationship with the FAP can't work around it. It's practically the norm up your way, Day Dreamer. However, many schools around China don't have that tight of a relationship (or such a corrupt FAP that it becomes the general norm, as in Changchun).  A full time teacher at one of the universities my company has partnered with claimed he had to skip out on a dodgy school in another province. The employer refused to grant a release letter and had cancelled their working visa. He went back to Canada, found a new employer and went through the entire visa process anew.

As far as I can tell, recommendation letters mean nothing in China. The release letter is the important one. Just get it and leave. It's not worth the hassle to argue.

This is where things can get blurry. The "release letter" and "recommendation letter" are often the same thing. It states that you've worked from this date to that date, fulfilled your obligations, did your job (complete with a box for really well, "adequate," and the mediocre box), how much money you were paid, where you worked, and features the chop of the head of the foreign affairs office. If the school adored you there is space for them to put in an extra word of praise, or, as Adam Smith found out: to slag the foreign teacher on their way out.

After worlking at Future English in fuzhou for four and a half years, half of that as the DOS they tried to refuse to give me a letter of release. When i told the PSB what they were doing i was informed that it was my problem and I had to solve it however I can. They refused to give me one because i had written my experience on the net at the greasy spoon and someone had read it. After going in to visit i was finally given my letter but it did require some coercion. I was amazed how after so many years they had tried to make my life so difficult, as well they refused to pay me for the overtime they owed me.
that being said I think these letters of release are yet another attempt at controlling the foreigners and sticking it to us when they do not like our choices.
someone said be nice right up until they give you that letter which is something I wholeheartedlly agree with. Wait until after you have the letter,lie about why you are leaving do whatever you can to get it then give them the gears.
Sadly thatpiece of paper has proven to be a pain in the a** and I am sure it will continue to be so.
Do not think that they are not willing to use that as a weapon no matter how long or how good your relationship is with them. I was surprised they tried to do it to me but then I found out afterwards they also spread many rumours about me as well.
So lesson learned.