1) At this time we don't know who made the complaint. But guys, we don't want this to turn into a witch hunt.
2) No, we don't have backups, but we're looking into recovering our entries. ETA:
3)


4) No, this will not be the end of us. Vive les scans!
5) ETA: Since people are asking about eljay's stance on fair use, from the TOS:
LiveJournal and its designates shall have the right, but not the obligation, to remove any content that violates the TOS or is otherwise objectionable, or that infringes or is alleged to infringe intellectual property rights. You agree that you must evaluate, and bear all risks associated with, the use of any content, including any reliance on the accuracy, completeness, or usefulness of such content. Furthermore, LiveJournal reserves the right to limit access to your journal, if found in violation of the TOS, including without limitation the Member Conduct described below, by removing the journal and related user information from the member directory, search engine, and all other methods used in conjunction with finding LiveJournal's users.
and
[members agree not to] Upload, post or otherwise transmit any Content that infringes any patent, trademark, trade secret, copyright, or other proprietary rights of any party
ETA: Guys, do me a favour and link to this post in your personal journals/blogs/whatever. I don't want people to get misinformation. I'm monitoring the comments and will be around to answer questions.
ETA: Update post here.
The mod team is looking at our options; check this space for updates.