Joe, if you can get into the diagnostics section of your router, can you post the download attenuation figure please? It's measured in decibels and is NOT the same as the signal / noise ratio. If the attenuation is marginal, this would explain why your 512 service was OK, and you are now having problems. I understand that you need a figure under 45dbs to get reliable 2meg ADSL.
Another thought is that some routers need to be reset periodically to maintain an IP address. Hourly seems a bit excessive though.
You may also have answered your own query. Although ISP's will have you believe that you must never use a household telephone extension cable, many of us do with no problems whatsoever. Could be it's having difficulty coping with the additional throughput?