I really don't think it can hurt in the slightest. He didn't explicitly say "Don't send in a Continuing Letter of Interest." No admissions committee that would previously look favorably upon taking you off the waitlist would then look negatively because you wrote a letter telling them how interested you are. You also never know whether other people on the Admissions Committee feel differently then the Dean, even though he was speaking for everyone. The only negative that can come with this is the waste of ten minutes of your time if it doesn't end up helping.
Journeyman, I am dumbfounded as to how you got into IU and W&L with your numbers. 155 LSAT and you applied to Vanderbilt? Honestly?