I hadn't thought of this option, so either way it's worth a shot. The worst that will happen is putting me back a week or so in time. And possibly getting stuck at 600 MHz if it doesn't work. Let's hope it does.
Edit - I am restoring my most recent Nandroid, which I made on 4/11/2011 prior to implementing the "move Dalvik Cache to SD" which was recently provided in (I think) script 26. That function gained me tons of internal memory (like increased from 27 to 207 MB). I did not encounter any problems with the several apps I have installed after moving the Dalvik Cache. Not sure if that would have any bearing on this issue with Script 28 though.
After restoring the Nandroid just now, I rebooted and opened Terminal. I had previously added the Terminal option to run SU and Velocity when Terminal starts. I removed that option today when Script 28 malfunctioned, to see if entering it manually would help (it did not).
So, I am now in Velocity Script and seeing the question asking me if I want to download Script 28 again. It appears restoring the Nandroid does in fact restore back to the previous script as well.
I replied "N" to the update. The screen then revealed I am in Script number 26. So I will have to stay here until I get word that Script 28 or newer is safe to use.
I am re-running the move of Dalvik Cache to the SD card (after it told me to clear my Download Cache to make room for the operation). One thing that I find a bit unsettling is that during this move of the Dalvik Cache, the Terminal screen says it is moving the cache and then "phone will reboot to complete the operation", but then it just sits there appearing to do nothing for several seconds. If it said "will reboot shortly" or something that would help me know it has not frozen in mid-operation, which I usually suspect when I don't see anything happening.
OK, I am back with 180MB free internal memory and running OC'd at 768 MHz.
Thanks for suggesting the Nandroid restoration. I'll continue to monitor this thread for news that Script 28 has been fixed.