AOL are known for offering their broadband at £9.99 to long-term customers, generally those on market 3 exchanges who are in an LLU area though
Check on here http://www.samknows.com/broadband/broadband_checker
and post back your results.
ALSO if your switching your calls to AOL I'd advise switching the line rental too. Otherwise your going to be paying BT for line rental, AOL for your calls, and it all gets a little messy.
I think you did the right thing to decline, it was not a very good offer IMO and has a very long contract.
Have a look at AOLs current packages to get an idea. http://www.aolbroadband.co.uk/
Finally if you have a problem with your phone line it will not cause problems being with AOL... Being with BT puts you at no advantage in terms of getting a fault resolved
Faults are handles by BT openreach - completely different to BT retail (the company that sell you bt phone and broadband). Openreach provide their services in the event of a fault to Talktalk, Sky, AOL, Orange etc... The guidelines are the same for all ISPs, they have 24 hours (I think) to resolve a voice fault. Openreach have to meet the same standards for all ISPs
The only difference is, if your line goes down, you contact AOL not BT. AOL will then send out BT openreach. If you stayed with BT you would contact BT retail who would sent out BT openreach. If you switched to sky, you would contact sky in the event of fault. You guessed it they would send out BT openreach... All in all no disadvantage, you get the same service in the end.
Final question, would you consider switching providers or are you happy?