About 2 years back I had a really great domain getting lots of traffic and money. Like King Midas I became greedy and impatient wanting more so I had an SEO do work in it and the guy built about 50,000 crap links (not some random internet person, an SEO I worked with). The domain has never recovered even though I got the amount of inbound links down from 57k to 16k. The domain may also have some panda issues in addition to the penguin penalty. These are all likely algo penalties since nothing appeared in webmaster tools.
Fast forward to this month. After nearly a year of work I am done trying to undo the damage that was done so I launched a new domain, far more scaled back. I wanted to use the blog from the old site though since it had a clean link profile and well written posts on it with at least one EDU link pointing to it. So I did a 302 (I know this does not pass juice) of anything site.com/blog/* to newsite.com/blog (this was not a page to page redirect it just all redirected to the new blogs index page).
Yesterday I noticed all my long tail rankings had disappeared. For 1 term I went from position 9 to 123. I have done almost no link building. I have built 4 links (all legitimate related sites), with 1 link coming from the home page of the old penalized domain (which is still a pr4 related domain).
Any ideas why this may have happened? Was it a bad idea to 302 the blog? Should I have done a 301 mapping each page to the new domain instead? Is Google confused believing their is a duplicate content issue? Is this just a short blip? Any ideas?