Hold up a second, we're making an assumption here that I'm not sure is correct.
The homepage may not have fallen out of serps because you included the keyword as the link to home, it may have fallen out of serps because Google decided not to allow you to pass that keyword as anchor text, thus cutting off your homepage from the rest of the site. There is a very subtle distinction between the two.
Personal experience: When my site was rather new it got a manual penalty which effectively made it impossible for my site to rank for or use the primary keyword as anchor text. I could prove this because the site also had sitelink status and Google was now removing that keyword from even the titles of pages that contained it. It made for some ODD looking titles I tell you.
I filed a reconsideration request and they did remove the penalty, my site was indeed mainly about the keyword and just because it was a newer site (9 months?) did not mean it shouldn't be on page one of results. The *snip* for that keyword was also not a manual one, the algo did it, probably because a new site was consistently getting into their top 10 results. This was in 2007 I believe, or late 2006, but I don't suspect this particular practice has changed much.
I have taken to using example.com as the home link if "home" or "index" won't do.