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I don't think there's any way that an 80 to 90% traffic drop can be attributed to the link juice loss of 301 redirects, Kevin. Did you test and confirm that all of the 301 redirects were actually working correctly when first installed? The challenge now is that many if not most of those original URLs may have now dropped out of the index, if they weren't redirected correctly (since they'll have been 404ing so long that the search engines will have dropped them from their indexes) . So there may not be anything to actually go back to. Unfortunately it's really hard to offer any sort of specific information in situations like this without being able to actually look at both the old and new domains.

Majority of shopping sites I've seen usually have the color tile under the product picture when it is listed with the other products. If they see that there are other colors, they will most likely click it to see what colors or sizes are available. This will improve you pageviews and keep the customer on the site, rather then driving them away right away after finding out the size or color is no longer available.

I agree with dvtruong and Erica; doing guest posts on relevant sites is a good way to get links. It seems as if your competitors are doing a little black hat, which is never good and Google will catch up with them.

I created a script and database that I use a regex lookup for the product id from old URIs and it will give me the new URI for that product, the script then sends a 301 with the new URL.  There are about 11,000 entries in the database.  Add to that the pages that don't have an exact match (such as extra product info pages and extra product review pages)...those are sent to the new product page since it is the closest match.  That means I probably have 301s serving for 20,000+ pages.