Appeal. Get on the phone with people (never underestimate the power of verbal, non-digital conversation) and appeal the decision and see if they will at least consider you for conditional admission. Most graduate schools have conditional admission programs. It may slow you down a year or semester, but at least you'll get into your 1st-pick program.
Can you appeal to the graduate school, especially considering you were admitted to the department?
Is the department willing to go to bat for you in appealing to the graduate school?
Being off .1 in GPA seems like it should be a minor thing, but I don't know the school's policy.
FWIW in the corporate world, when a company says they have a GPA minimum for a given job (say 2.5), and they actually reject applications based on that minimum - if they make one exception they would have to go back and re-justify all of those rejections that came before. So for that company making an exception might not be an option... although this often is only applicable to entry level positions, so they could try to get you in a different role where it wasn't a requirement. In the end it's really just a liability thing because it opens up grounds for them to be sued, and it does help cut down on the stacks of applications to review. (Source: helped out in university recruiting for a company for a couple of years).
Best of luck, that's an awful situation to be in. Hopefully you're still able to attend!!
