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You are definitely right in that they have a tremendous amount of power at there finger tips when it comes to smaller companies.
Okay, we have determined that the letter to Google is out. The step I would take for you is 3 fold:
1. Contact an SEO company which also offers PPC advertising campainge management. Explain the situation and see if they can get you back on under their supervision.
2. Even though you are ranking high in the organic listings are you ranking high for the SAME keywords as you were purchasing with Adwords. If not, maybe you can optimize for those keyword terms.
3. Try opening up a sister site strictly for Google Adwords traffic. You can keep the same site but just change the name, logo, look, phone numbers, etc. Then open a new account with Google Adwords and advertise for that site. You don't have to get rid of the factory supply site, but at least then you can still get Adwords traffic. It's not like you will have to wait to get ranked with adwords as your paying for placement anyways. Make sure you don't use ANY of the same information though including credit cards and such.
Those are the only 3 options I can think of... Anyone else?
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