Ist this a Google Bug?

Question regarding double hyphens

[123ibuy]

This may be a dumb question but I'm stumped and, honestly, a bit out of my element. When I do an "allinurl: domain-name.com" (with my domain name which has a single hyphen) on Google, the results come back for www.domain-name.com and www.domain--name.com (note
the double hyphens).

Why are these results mixed when I didn't ask for a double hyphen in the search query? It seems Google can't tell the difference between these two sites.

The bad part is that my site had a PR5 in early January (had it for 1 yr+) and dropped to a 1. I started looking for a reason since I had nothing black hat on the site (6+ year old site). The double hyphen site has a PR0 and is basically nothing but SE spam links. My organic Google traffic is now 0 from thousands/day and I wondered if a penalty for them might have "rubbed off" on me since it seems that Google is having trouble distinguishing between these two sites.

I'm doing fine in MSN but nothing on Google (or Yahoo!). Any ideas about Google (or Yahoo)? Also, do I have any legal or other options to deal with this domain? IMO, it was clearly done in bad faith.