Be careful here...
You stated -- "planing niche-specific guest blogging in the hopes that it would help".
This is link building, pure and simple and I would put a brake on it right now.
Fix what is broken and remember this "link building will not help remove a manual or algorithmic penalty" !!!!!
In fact it may actually make it worse !
You fixed the site now what you should do is this ...
Notify Google as such..
Submit a reconsideration request and tell Google the site has been fixed.
Then sit back and watch your ranking return !
Then if you must go build some links.. but to do so now is a mistake.