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Could you show some sample web2.0s? I would also like a discount to start with the smallest package and see how it goes. Also, do you index tier 2 links that you build to these properties?

Can I see an example of the partial report you provide?

800k pages in a week? Strange! Are all pages unique and significantly different from one another? You could get them indexed using the "submit to index" function on WMT.

What caused the initial penalty?

Don't judge by what you notice in a single day, there are many factors that come to play. Allow a period of time and take your average performance.

If you are paying for SEO, you deserve to know what links you got and where they exist. This is where the difference of doing it yourself and buying ready made packages would be obvious. If you dont get a report, you would never know the quality of service you are getting, nor would you be sure...