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I've heard that an update for blog comments was being implemented. Something down the lines of posts that didn't seem appropriate to the blog that were being commented on, as well as the post being under 300 words. These sort of things could have raised some sort of red flag for the algorithm...

As far as I'm concerned, he's rebuilding the site to gain some sort of PA out of it. He will most likely 301 redirect it afterwords. As for the domain name, he bought it, and is the new owner of it. I don't see how you "renewing" will get it back.