Your decision. I would have settled now. Alone because of the sums mentioned: they are in no proportion to the latent risk of the next (now "real") instance.
But all the hassle then for maybe 100 euros?
Of course, there is also the risk of not winning. But I wonder on what basis the judge should rule in favor of the landlord...?
That is exactly what the case law in Germany is designed for... to confuse the plaintiff until he gives up his right and settles amicably... especially in smaller amounts. Saves the judge work, of course...
I find it quite remarkable that the landlord has reduced his claim from 1,200 euros to 250 euros... probably not without reason.