Jim, this just goes to show that there's no sense in freaking out over a change in rankings based on 3 days' time.  I can't even count the number of times I've seen a site drop after link building - only to come back to the same place or a higher placement a week later.  This is typical and almost expected when I'm doing SEO.   As long as you're not doing anything blackhat your site will be just fine.  There's no way Google is going to single your tiny site out among billions of others.

In the future, give your site a minimum of 2 weeks.  I think of it like this:

I do solid SEO. No blackhat. No crap.  Because I do solid work I should be rewarded by Google and never penalized.  With that in mind, if my site starts moving around in Google I know its a GOOD thing because it means Google is reevaluating my site.  I also know that because I only do good work a reevaluation by Google is always going to show me in a favorable light.  I want to see fluctuations in my rankings. It can only mean good things for me.

Absolutely a bad idea.  You should be using that h1 tag to promote the current page only, not the same keywords over and over.

Let the domain names expire?  Why? So the competition can pick them up and use them against you?  You might not agree with my methods, but to let the domain names expire would be a mistake given the current weight google gives to exact match domains.

I can't tell you what the best approach is for you.  For me, I look for domination of a niche when it comes to local search.  The above posting is how I do it, but it might not be the best method for you.  I haven't had success with simply redirecting a domain name.  I have had great success with the method I've mentioned above - linking from the keyword domain to a page on my main site with the exact keyword phrase after the keyword domain has been established in Google.  In fact, what I often see is the #1 ranking for the keyword domain (exact match keyword) and a #2 or #3 ranking for the page I link to from the keyword domain on my main site.

Hope that makes sense. lol.

I have had extensive success with this method.  The catch is that you need to make the long-tailed keyword URL a site that is actually useful to the world.  Don't just put up a 2 page website and link like crazy to your site. You need to make it useful with good content.  I'd say 10 pages minimum of quality content.  You can do this in about 3-4 days with a wordpress.  Also, don't link to your MAIN site for a few months so that google trusts your other domain.

Some will argue with this, but it has worked very well for me in some niche markets.  Also, you hold a domain name so that a competitor can't get it.  Considering the weight google puts on domain names its worth the extra effort to hold and use any domain names you can find.

Again, be careful not to turn the site into a doorway site.  Make the site useful with new articles and fresh content.

Notice more sites have an "in the News" section on the home page, or something similar like press releases...

Apart from providing users fresh content, is there an SEO value to this?  What is the explanation for this?

Have a feeling the answer is obvious but just not too sure

Thanks a lot.