Is this a dance or penalty?

Nope.

Will I still be able to rank for the same keyword if I make a new article on it and make that rank or does the penalty (if it's a penalty) stick on the site?

Penalties don't stick unless severe enough. A few links is all it can take though if you're not careful. But I don't think it would of been the articles as long as they're unique
 
Strange case. Have you checked your link profile? Is it possible that someone did negative SEO on your site?
 
For manual penalty don't hurry to send a reconsideration request. Most people loose their patience and start to worry about penalty as soon as they get a warning message in GWT. Just conduct a link aduit in your site. Collect the latest build links from GMT tool. Filter the spammy low quality links that points your site then disavow the links. And then, submit a reconsideration request.
 
I hope your rankings come back. I often find that some articles drop really low, then after a couple of days they pop-up slightly higher than before. This seems to happen when I add new content, the article dances around for a bit then kinda sticks, then dances, then sticks.

I typically have 5-10 manual 2.0s pointed and a handful of high PR links. In the past, spammy links got the best of me and those sites while killed in Google tend to do well enough in the other SERPs to keep them around. I suppose I could disavow, but whatever.

Try taking a snippet of text from your article and placing it in Google and search for it. If it comes-up as the top result and its linked to your website, then it may be doing the dance. If another website is ranked above yours with the same snippet, someone might have jacked your content.
 
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