Your tension looks like it's backed pretty much all the way out in your picture. It sounds like it's releasing ok though. Have you tried stitching just by turning the handwheel? If so, does the thread break that way too and can you see where it gets tight first? Right now I'm still inclined to believe the problem is in the top tension assembly. My Rodney machine had all sorts of tension issues until I took the top tension apart and cleaned it. It appeared clean before that but cleaning it did make a difference even though I'm not sure what the problem really was.
I hate frustrating weird little mystery problems like this. Give me thoroughly broken, the problem's right here type problems instead any day.
The best advice I can give you is to ignore everything you've already done, grab your favorite beverage, relax a bit then approach the machine like you've never touched it before.
Rodney