As you said, I would just re-teach Sit. Once he's sitting reliably with your hand as a target, move back to the original command. If he Downs, wait five seconds with no reaction, and don't treat him. Hand target him 3-5 times. Try the Sit command again.
He should eventually be able to work it out again. Then try teaching Sit/Down together, so he understands the difference.
Your cream cheese limit sounds right to me, but you may want to ask in the Health forum.
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