Q:"Is it considered trademark infringement if I received a trademark?"
A: No, that would be the opposite of infringement, unless you received it as stolen goods.
Q:"Is mimicking functionality of a website illegal?"
A: No functionality is normally what is not protected, expect perhaps by patent.
Q"so far received a pseudo mark"
A: Wrong. You likely received a "psuedomark notification" from the trademark examiner that your mark is considered equivalent to a more normal spelling or pronunciation, so it will be examined as if it was identical, which makes your mark a "psuedomark" of the more common usage. That doesn't mean you received anything except a notice, more likely meaning your application is in trouble.
Q:"Thus far we have traded letters"
A: Without an attorney. That would make you a pseudo idiot. The only one to be trading letters with an attorney is another attorney, YOUR attorney. If you are doing it, you are likely toast due to self-inflicted damaging statements.
Q: " I've determined that this 'to me' isn't the case, and I plan to fight this all the way through. I have full interest & no bad faith."
A: Yes, you do have a fool for a client. If you are not an experienced trademark litigation attorney you sound like chum for the shark circling your nest egg. If you don't get a shark repellent expert (another shark, another trademark attorney) that fight "all the way through" will be very short and painful or maybe long and more painful. Don't be a fool. Get an Attorney and get one quick and QUIT TRADING LETTERS. Trading letters is about the dumbest thing you could do as an accused infringer.
Q" My site is completely different in design"
A: In your "expert" opinion? Seems the shark circling your assets does not agree. Get an attorney or get eaten. Think I'm kidding. Do this on your own and come back and tell us how it went!!
I am not your lawyer and you are not my client. Free advice here is without recourse and any reliance thereupon is at your sole risk. This is done without compensation as a free public service. I am licensed in IL, MO, TX and I am a Reg. Pat. Atty. so advice in any other jurisdiction is strictly general advice and should be confirmed with an attorney licensed in that jurisdiction.
Your posting is less like a question, and more like a pseudo-legal opinion by a non-lawyer. However, there appear to be some actual questions in the post.
"Is it considered trademark infringement if I received a trademark [registration]?" No. Infringement is based on the accuser's actual use of the mark (although one must actually use a mark in commerce before the USPTO will issue a registration for that mark).
"Is mimicking functionality of a website illegal?" It depends. Cannot be answered in the abstract.
"I have full interest & no bad faith. Am I wrong?" Maybe. Consult with a trademark attorney about the specific facts of your situation. Good luck.
This answer is for informational purposes only. It is not intended as specific legal advice regarding your question. The answer could be different if all of the facts were known. This answer does not establish an attorney-client relationship.
Q: "Through my research, I've determined that this 'to me' isn't the case, and I plan to fight this all the way through."
R: No you don't. A typical trademark infringement lawsuit with domain name involvement costs about $200K to litigate through trial. Then add another $50K for post-trial briefings and, perhaps, $50K for an appeal. So, no, you cannot "fight this all the way through" and the other side's attorney knows this. Your ONLY play is to capitulate to the other side's demands [in a way that does not expose you to monetary liability] or to hire your own trademark attorney to evaluate and handle the situation -- which will likely be to settle the dispute in a way that does not expose you to monetary liability.
The above is general information ONLY and is not legal advice, does not form an attorney-client relationship, and should NOT be relied upon to take or refrain from taking any action. I am not your attorney. You should seek the advice of competent counsel before taking any action related to your inquiry.
Regarding the cybersquatting claim, a company must have a "distinctive" mark in order to claim cybersquatting. I doubt if the other company has any trademark rights in MYDOMAIN (if you are giving me their real domain name) for a business that helps people register and transfer domain names. It is most likely generic or descriptive of their services and therefore not capable of protection. Which woud also probably rule out any trademark infringement claim. Contact an attorney to help you verify this.
You really, REALLY, need an attorney to check the other company out and help you respond to these claims.