New sub-domain launches thousands of local pages - is it hurting the main domain?

[VMLYRDiscoverability]

Would greatly appreciate some opinions on this scenario.

Domain cruising along for years, top 1-3 rankings for nearly all top non-branded terms and a stronghold for branded searches.  Sitelinks prominently shown with branded searches and always ranked #1 for most variations of brand name.

Then, sub-domain launches that was over 80,000 local pages - these pages are 90-95% similar with only city and/or state changing to make them appear like unique local pages.  Not an uncommon technique but worrisome in a post Panda/Penguin world.  These pages are surprisingly NOT captured as duplicate content by the SEOMoz crawler in my campaigns.

Additionally about that same time a very aggressive, almost entirely branded paid search campaign was launched that took 20% of the clicks previously going to the main domain in organic to ppc.

My concern is this, shortly after this launch of over 80k "local" pages on the sub-domain and the cannibalization of organic clicks through ppc we saw the consistency of sitelinks 6 packs drop to 3 sitelinks if showing at all, including some sub-domains in sitelinks (including the newly launched one) that had never been there before.

There's not a clear answer here I'm sure but what are the experts thoughts on this - did a massive launch of highly duplicate pages coupled with a significant decrease in organic CTR for branded terms harm the authority of the main domain (which is only a few dozen pages) causing less sitelinks and less strength as a domain or is all this a coincidence?  Or caused by something else we aren't seeing?

Thanks for thoughts!

[beardso]

In my practice when I do pages for different cities etc. I always include a paragraph that talks about the city and make it as unique as possible.  I also include a picture of the city and change some verbiage.  I would rather have unique content then something that is fast with a chance to be slapped on the wrist.

[KeriMorgret]

Is this subdomain also a campaign in SEOmoz? If it is, and those pages aren't being detected, could you drop a note to our help team at help@seomoz.org and let us know? We'll pass it along to the engineers so we can make sure our tool is properly detecting that type of content.

[VMLYRDiscoverability]

Thanks - we do have a separate campaign for the sub-domain specifically and it does not indicate duplicate pages as a concern.  They aren't 100% the same, but certainly over 90% if not more like 95-98%