Great post, really great advice and exactly what I needed to hear, even though I'm not applying any time soon. I just started my second MA, and although my situation differs quite a bit from yours (I did an undergrad and MSc in Political Science), it's still somewhat reassuring that bad grades from a previous study do not necessarily need to kill off any chance for grad school applications, as long as you're able to show significant improvement. I wish I could travel back in time and punch myself in my stupid, smug face, because I was such a lazy wanker (and generally a terrible student) during my PolSci days, especially during my undergrad.
Ah well, what's done is done.