G8Ralphaxi, I am so sorry you had to go through all that.
I feel your pain, to some degree. The year after I went alum, my chapter was reorganized. I was still around for grad school, so I saw what went on, but I wasn't directly involved. Basically the chapter was told to get a certain number of new members, or else. They didn't get enough NMs, so national officers came in and interviewed everyone and forced about half the chapter to go alum. A few women just deaffiliated outright (by their choice). It was really painful to see so many women who had worked so hard for the chapter, in some cases women whom I had rushed in, being told "guess what, you're alums now" ... or turning in their pins.
At the time, it made no sense to me that nationals was concerned about low numbers, so their solution was to cut the chapter's size in half. It still doesn't really make sense, but my chapter has really come back - still far under total, but strong nonetheless.
I don't think the new alums were told they couldn't wear letters, but a lot of them were so upset that they just didn't.
lifesaver - hear hear