I think that you are very lucky to have ended up with a B.
Where I come from an 80 is a B-. 114/150 is a C or a C+. I can see how the great score on the lab manual can offset the C on the final and allow you to walk away with a B overall. However, you did not earn an A. According to the criteria that the professor clearly stated you did not improve on later tests and therefore did not have any earlier test scores dropped.