Is 301 redirect/penalty reversible?

So back in 2010 I had 2 websites penalized, both ranked for same keywords on page 1 before penalty.

Fast forward now.....
Site #1 (older, more links) still has algo penalty...
Site #2 (newer, some links) gets completely redesigned, and via reconsideration requests and disavow tool MANUAL PENALITY LIFTED!

Site #2 started to slowly recover it's rankings....

BUT I then 301'd site #1 to site #2, and rankings fell. (DAMN!)

So 1 month later, I just now changed the 301 of site #1 to some other website.

Do you think the site #2 will recover when Google sees the 301 going somewhere else now? Is 301 reversible? Did I screw it up?

sorry but site 2 will not recover. You get manual penalty lifted and then screw it and then want to get it back. Not gonna happen. Also the backlink profile of your site 1 matters a lot. If they were junk links they will be passed to any site so i would suggest to stay away from both these sites and build a new one.

Cheers,

When you directed the penalized site to the new one it clobbered the newer domain.

If you build a good link base to the newer one it'll be more immune to that sort of attack. Remember, any competitor can redirect their penalized sites to yours....

OK i screwed up... but by redirecting site #1 to somewhere else now, won't google stop passing the links and link juice / penalty to site #2????

how can 2 or more websites get the inbound links from a 301 redirect?????