Google still has them as "bad sites" and obviously wants them to get less and less traffic
Right, but not because they have rescored your changes and found them lacking, but simply because they haven't got back around to you yet. Now that I think about it, Matt's comments we talked about in the thread you linked support that as well: "The general rule is to push stuff out and then find additional signals to help differentiate on the spectrum. We havenít done any pushes that would directly pull things back."
Think of US dropping a few nukes in Pakistan to "fight the Taliban".
Dude, the "slow painful death" thing was just a metaphor. I'm not actually dying of pandalization, and neither are you. Moving your site from page 1 of the SERPs to page 2 is not even remotely equivalent or even vaguely similar to nuking a country. Have a sense of proportion. (of course, as any hitchhiker knows, "if life is going to exist in a Universe of this size, then one thing it cannot afford to have is a sense of proportion.")
I still think that they have enough power to run the whole thing at least monthly.
What makes you think that? It's just a hypothesis, and IMO it doesn't explain the data.