After much thought, and insight from your kind comments, along with some further reading and research, I believe that I've finally begun to understand what's going on here.
I don't believe that I'm taking small enough steps and have been trying to raise criteria too quickly. This is certainly mixed with Gracie not yet fully understanding or trusting this new method. I'm sure that she's wondering what the heck the deal is... all of a sudden nothing is the wrong answer. Not getting corrections (VERY difficult for me), but still not being reinforced for everything she did last time (trying older behaviors first). Poor girl sure has the right to be confused!
Her previous progress is staying pretty solid. She's all about the target stick! Her eyes light up and ears perk up when I get it out... just like when she sees a leash or hears "Wanna go for a ride?". She reacts much the same way when she sees the clicker in my hand. In fact, she has been known to bring me the clicker off the end table. "Time to train, Dad!" 
I have also upped the value of her treats a little bit by using diced cheese mixed with kibble and oaties... keep it in the fridge and the kibble/oaties take on some of the cheesiness.... she's thinking that's way cool.
So, now we're heading back to kindergarten. Review, review, review for a couple days and see how we're doing, then decide if we can advance a LITTLE bit at a time.
As a side note, the weather has finally begun to be nicer, with very little snow piles still melting. Birds and squirrels (evil) are all over the place. The sun does still exist, and has actually been shining!!! (Michigan is also known as land of the gray skies from about October through May...so we're doing very well, considering.) We've had plenty of time over the past few days to be out and chase the jolly ball all up and down our hill. Excellent.
