I went through all this about a year ago. And while most people back then advised me to wait it out (no penalties, just a huge drop in serps), instead I got impatient and started doing a lot of knee-jerk reaction stuff -- like changing domains, changing web hosts, redesigning the site, sending re-inclusion requests to Google. None of which did any good to fix the problem. So I put everything back the way it was and diverted my attention to other things. It's been 9 months, and the site is now back to where it was. Apparently you just can't rush these things.
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