Hi Matthew,

specific gravity is, (very) simply speaking, a measure of how much
sugar is in the water, compared to water without any in. Alcohol is
less dense than water and therefore a reduction in alcohol could be
reflected by an increase in specific gravity, BUT the change would be
far smaller than a hydrometer could measure (i.e. much much smaller
than the uncertainty already present in the hydrometer).
No, it isn't strictly an alcohol killer as biochemical reactions are
never that precise - for instance yeast turns sugar to ethanol and
carbon dioxide, but also produces a host of other compounds in varying
amounts (e.g. methanol, glycerol etc). The bacteria could affect the
taste of the wine .
I think that considering you have noticed the problem quickly, and
taken steps to rectify it, you won't have any trouble. Perhaps though,
it would be worthwile sampling the wine more regularly - it may mean
the wine doesn't last as long.

Hope this is of some use, best of luck,

Just as an aside, I have just bottled a batch of plum wine (luckily I
didn't have this problem), the taste was quite extraordinary - a full
bodied / pinkish/red wine which reminded me a lot of tawny port. I can
hardly wait to start opening it :-).

M.Baker