Once your PH rises to 8.2 your xenia should bounce back like nothing happened. Quick changes in PH are very stressful to reef invertebrates. The general rule of thumb is that PH should not fluctuate more than 0.2 +/- within any 24 hour period. Silicates would explain the diatoms issues although Calfo also says that excessive iodine may contribute to diatom outbreaks. Are you using RO/DI water? I think kent makes a silica busting DI cartridge. Could your silicates be coming from somewhere else?
Well, I guess it has got so bad that the vultures have moved in. I cought a hermit climbing up and down on the stalks this morning and the skeleton has become more exposed at the top. I am wondering if the polyps near the bottom somehow survive, will is eventually grow back?
If the gorgonian doesn't completely shed all of it's flesh then there is a possibility that it could grow back, but it would be a long, uphill battle for it to recover to what it once was.