OMG! What have I done, Google page 1 to invisible?

I requesting some serious help from the SEO experts here at WF. I've read through several posts that have had a similar problem but none of them seem to fit my particular situation.

So here goes.

I have a site (PR3) that I've had up and running since 2000. I've not done much backlinking but over the years, we've managed to pickup <200 backlinks from various sites.

As of Oct.30, I was ranking on page one in position one for many targeted keywords. In fact, I was on page one for over 20 keywords and was receiving a decent amount of traffic from Google.

Using what I've been learning about IM for the past year, I decided to optimize my site a bit more. For example, I didn't have a sitemap so I created one and submitted it to Google. I submitted to the $299 Yahoo Directory.

My main site page seems (seemed) to be the only one that is ranking while only a couple of my inner pages rank at all. Anyways, I decided I would try to optimize a few inner pages for targeting specific keywords and to try to make my main site a little easier to navigate to get to the specific pages people might be looking for.

This is a case of "if it isn't broken, don't fix it". I changed my main page title from a bunch of keywords separated by commas to a few keywords separated by the "|" character. I added content on my main site above the content that was already there, with some links to buy my products (not affiliate products). I removed a bunch of flash from the top of the page that took forever to load and replaced it with a video...page loading much faster now.

Now here's where I think I got myself into trouble. I inadvertently deleted the Google verification code. 3 days go by and I recheck my rankings using Firefox Rank Checker Plugin and none of my keywords rank at all in Google. I still have many page 1, position 1 in Yahoo and Bing.

Needless to say, at this point I'm ill with worry. I go to the Google Webmaster's tools and check to see if the site if verified... it's not! So I add the verification code back into the main page (praying rankings will comeback.)

The other thing I did was to send an email to have my site reconsidered, explaining that I accidentally deleted the verification code...no response from Google.

I've also created 3 other WP Blogs on separate IPs with the intention of posting content there linking back to my main site specific pages but at this point, I have not done that.

I also have a /blog on my root domain installed but have not really started to work on it...got the permalink structure done and installed seo pack and some other plugins but have not put much effort into it yet. I think there's maybe 1 post.

When I discovered Google Webmaster Tools, I started really looking at my site...found there were some 404 errors that I quickly corrected and generally tried to delete unused pages of my site. These were pages I would use for testing...for example, if I was going to work on a new index page of my site, I would name it something like "indextest.htm". I had several of these types of pages for various pages of my site that weren't used so I deleted those.

Another thing, I'm using a template that I really like. The template is well optimized for SEO (as evidenced by my previous rankings) but it is CSS based. I know Jack about CSS so I simply used FrontPage to create the content on my pages and used the wysiwyg editor in FrontPage. I understand that this defeats the purpose of using CSS but it seemed like there wasn't a problem.

Anyways, I started to convert some of the content on the main page to H1 tags instead of just making the text bigger using <font> tags...figuring it can't hurt.

That's basically all I did and now my page1, pos1 rankings are gone! All except 1 keyword that I still ranks page 1, pos 1 for. A few other keywords are in page 2 and a couple others are buried in page 3 and beyond but most of the keywords I was at least ranking for are showing no positions in Google at all now.

I broke my site! Help! Expert Warriors from around the globe..what the heck did I do?

My site is still indexed...still has good Yahoo and Bing rankings but in the last week has not really come back in Google.

I've heard of people making some changes to their site and losing rankings for a short period of time...is this what this is? Or did I completely shoot myself in the foot by deleting the Google verification code from the site for 3 days? Did I bring unwanted attention to my site by Google and now they've removed my rankings because I don't have a billion backlinks?

I'm losing sleep, feeling like and idiot and am really looking for someone that knows about these matters.

I've never done any black hat methods of driving traffic. I don't link to unscrupulous sites, have any kind of linkwheel setup or anything like that. I am considering purchasing Senuke to start building backlinks to inner pages but at this point I'm freaking out a bit.

I'm also considering a whole new website design on a WordPress backbone so I can optimize all internal pages easier but I'm not sure which way to go.

Any and all advice will be greatly appreciated. I've read that people shouldn't post their domain here but I will provide the info to someone that may be able to shed light on the problem.

I read a post here recently in which WF member "Crew Chief" had some excellent advice for someone that had a similar issue though it didn't really apply to my situation.

Am I in the sandbox? Is this a Google dance? Have I been penalized? Or did I really f something up. Thank you in advance fellow Warriors!