Sgt_Kickaxe - 10:14 am on Apr 17, 2012 (gmt 0)
Google once provided an answer to a message like this on their webmaster forum that essentially said you can always fall back on adwords because some people have excellent success with it. I can't find the link so don't quote me on that but, I suppose, it is one option.
other options - get rid of the link exchange and ease up with the daily posting on other sites or at the very least change the link text you're using so that it more closely matches what Google GWT says are your primary keywords.
Any hope? there is always hope but I don't think you can hope for Google to reverse the damage or increase traffic quickly. Declines in traffic are quick, increases not so much. Ask for reconsideration after you've done the dance and move on no matter what they say.
I had the same thing happen on one of my test sites recently, rendering it useless as a test site. It had been a sort of side project for a hobby I enjoy but got smacked. Ironically any page with adsense is doing well still but if a page has even one affiliate offer from any of the well known programs the page receives ZERO traffic, maybe 1 visitor a month if I'm lucky. If you have affiliate links, ditch them, it can't hurt since you're not getting traffic anyway and that comes first.