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For the phrase that begins the title tag, I don't think having more terms in the tag is going to affect rankings for that phrase one way or another.  For any additional phrases in the tag, whether or not the page ranks for the phrase is also going to depend on how the phrase is used on-page, but I agree that they usually have diminishing returns rankings-wise. As for testing one phrase vs. multiple phrases and their effect on CTR and rankings...sounds like a great YOUMoz post to me!

I honestly can't offer any short term suggestions. It's a big challenge to know what the best short term path is.  Ultimately, you'll need to remove all the scraped content.  Do that without replacing it and in the short term, you won't see any gains, though you may even see some short term losses as it's possible you're not being purely penalized.