An SEO built a copy of my company's e-commerce site on another domain that contained our product's keywords in the name (i.e. as if Levi's built a duplicate site on bluejeans.com)...and then they referenced a lot of the images on the actual website from the other domain (as if Levis.com had images on it referenced like: img src="http://www.bluejeans.com/jeans-front.jpg"), but when you tried to reach the site by typing the name into the browser you would be redirected to the regular website, so the site wasn't really used for any purpose except I guess SEO.

Since I didn't think this was doing anything GOOD for us at the time, I deleted the duplicate site and let the hosting on it expire, only to watch our search engine position rankings fall dramatically.

Any ideas as to what was going on there? I want to get it back to understand its impact, but I don't know how it was set up. I contacted our host and they have no idea how it was set up. I suspect there was some sort of redirect in play, or something?