Just to confirm, have your rankings changed at all?
I'm not sure on all of your questions ... yet ... but for starters, if you are going to use that as a type of indicator - I would also track with other search engines such as Yahoo and MSN. Doing this for multiple search engines may give you a better feel for the situation.
I don't put a lot of weight in the 'Number of results' google displays. For starters, for any search result I believe there are only 1000 results available.
For example, this search on google for [google] shows 192,000,000. Here is advanced search displaying 100 results per page. As you can see from this link, once you get to the 10th page there are no more results available.
The number of results is an 'estimate' and notoriously inaccurate. These may not be the issue, but they are reasons I wouldn't use this as an indicator that I am too concerned with.