This is exactly the situation I am currently in. Bombed out after 3 semesters with a .8 total GPA. Came back after a year, changed majors (and picked up another major) and ended up with 3.7 and 3.6 major GPA's, despite a 2.9 overall. I think that in terms of selective consideration of statistics like this, your major GPA is a better indicator than your "last 60 credits" or whatever.
I believe and I have been told that my overall package is "great" despite the horror of my UG transcripts, and I'm less anxious waiting to hear back because I also have an MA with a 4.0, which I'm inclined to think will greatly displace the sorry state of affairs during your/our UG.
But besides all that, if everything else about your package is good, you've been told you have potential, and you want to pursue advanced study, would you be comfortable not even trying because one part of your application is deficient? Committees each weigh applications differently and almost all humanities dept's give little (or the least) credence to "numbers" i.e. GRE and grades. Nail the crap out of your SOP and WS, get good letters, and NETWORK with the faculty you'd like to study with before applying and you'll have nothing to worry about. You won't necessarily get in with funding, but you'll have nothing to worry about imho.