Really? Going from the main event to almost complete obscurity for months is what I'd call an ass kicking right back down the card.
Now, I believe that it's not permanent. They gave him the belt because I assume they see something in him and now they're just trying to round off rough edges. On the other hand making him into Kurt Angle 2k10 isn't exactly the best way to do that but whatever, that's the general idea I think.