The key is getting a 3rd party to the table. For example, if P&G were expressing interest... It reminds me of a case from b-school titled, "Up for Auction: Malta Bargains with Great Britain" which is worth a read if you can track it down. Having a 3rd party could mean the difference between getting $10K or $1MM.
A potential problem in this case with using a auction with multiple bidders: it could reopen the domain ownership dispute.
By my (admittedly limited) understanding, demonstrating you are not just interested in flipping a domain to the highest bidder, but have a valid intended use, is one of the factors that can overcome a trademark claim.
As in many questions asked here, the poster really needs to find an expert. I would suggest someone whose business is domain buying and selling, including in the presence of trademark claims, and get their negotiation advice (perhaps for a commission).
(Sorry, no names come to mind. There was an article about some successful speculator/squatter in Vancouver a couple years ago...)
