Sure, if you have an actual colorable claim of a violation of a legal right, wave the threat of court action. But also recognize that that escalation can work two ways...
> but on the other hand them sending anyone to court will also cost them extraordinary amount of money
Alphabet has $117 billion cash on hand, they can handle the cost. In fact, they can handle the cost of a scorched earth defense more easily than the cost of getting a reputation for rolling over everytime someone waves the threat of a small claims action.
> so I imagine before they accept any such legal challenge they would ask the CS department to actually have a look at the case first.
More likely, once they get that kind of letter, the legal department will probe the CS records of related to the issue to determine the legal position. They might then suggest just giving you want you want, or they might then send you a nice letter from their attorney about how they are prepared to make a claim for (e.g.) civil fraud for the deceptive action that they were previously willing to leave with an account termination, and that if they do so it will far exceed the small claims limit and they will use that counterclaim to move to transfer your case out of small claims.