Lynn,
We had a few "site:" queries that we were watching as the full URLs came back replacing the truncated ones, for example: site:eventective.com/usa/Georgia/Atlanta. When we discovered the original problem, almost every listing page in those SERPs had a truncated URL, but by the start of last week it had gradually cleared up to only 6 or 7 listings with truncated URLs while all others had the full URL. Then suddenly we had 5 pages (50 listings) of truncated URLs and now almost 300 of them for that one query have the truncated version indexed. It appears to be continuing.
Another detail I noticed was in Webmaster Tools. All of our listings are in our sitemap with the full URL. When we had this problem before only about 50% of our pages listed in our sitemap were indexed, assuming that is because the truncated ones were in the index instead of the full URLs that were in the sitemap. As the truncated URL problem cleared up that ratio improved to the point where it was pretty steady at about 96-97% of our pages in our sitemap were indexed. Once this problem started to reappear that number dropped down to 90% and kept going down to the point where it is at 77% now.
The only real change we made was an upgrade to our server hardware at our hosting company.
I've considered disallowing the truncated URL pattern in the robots.txt, but I really shouldn't have to do that with the 301.
I'm starting to wonder whether google is sending us a signal that they like the shorter version of the URL better.
Thanks for taking the time to take a look at it.
Michael