And I bet you folks faught fair!
I'm reminded of the discussion the other day about "evil".
At the risk of acting the perfect cynic - had you preservation folks concentrated your efforts on some maybe-not-so-clean tricks to bring down the crook, perhaps you might have won. (As you have posed it, this was not a battle about right and wrong, it was about strong (and crooked) and weak (and honest).
Faught?
The big preservation organization did not fight this fight, because they were verging on getting a preservtion ordinance passed and did not want to be seen as anti-development. The small group, which was founded to actually buy and preserve buildings instead of just being a social group that talks preservation but has no clue about what is going on, was the group trying to buy it. (All the small group members also belong to the larger group.)
(The large group, which numbers in the hundreds, donated $1,000 to preserve the theatre. We donated $7,500 and there's only a few dozen of us, which gives you an idea of how much they really care.)
This boiled down to a battle between the neighbors who abutted it and the city, who thinks nothing of sacrificing our quality of life to get more tax dollars.
I can list over a dozen acts in which the developer went above the law but if your lawyer is the former governor, you can get away with a lot!