Frost_Angel - sounds like classic Panda to me and similar to my own experience. After 9 months and massive changes, I am finally starting to "get it" and pull my site out of the mire.
Have had to accept the all conquering days of my 7 year old site are probably behind it; I just don't think Panda allows you to stretch yourself so thinly anymore unless you have the 'brand' factor.
Small and tight seems to do better these days. And, if you think of bashing content farms, this makes sense: they had lots of content on lots of subjects and lots of it overlapping. And, it's worth noting domains like ehow that appear to have stronger brand factors were less scathed than others.
Personally, I have deleted 30,000 pages and canonicalised plenty more. And, each time I consolidate, the remaining pages do better and better.
Start by looking at very low visit long tail pages - they're the ones that are hurting you and pulling the rest of the site down. Also target high bounce pages and improve or remove.
Best of luck.