Continue to hold the pool at shock levels until you can get through the night with losing no more than 1ppm of chlorine. And, then for good measure, i advise holding it at shock level for one more day after that. Then, when you are at that point, you can let it drift down.

Regarding pool blankets -- they definitely help minimize heat loss at night. I'd say replace it. They aren't really all that expensive.

I'm gonna let somebody else talk pumps with you. The only thing I will say, and this is not just to you, but also to anybody else following this thread --- when it comes to pump size, bigger is not always better. Pool stores want to make money and thus they are going to try and get you to buy the most expensive things they can including bigger pumps than you need. But, if you get a pump that is too big for your pool, it will just force things too fast through your filter and your filter won't be able to work as well. Plus, it just wastes electricity. I have a 24 ft. AG and I used to have a 3/4 hp pump, but when I replaced it a couple of years ago, I downsized to a 1/2 hp and it works great.