I was able to duplicate this. So here is what is actually happening:
When I went to select multiple objects, I accidentally used shift instead of ctrl, which is the default clone object key. When I hit cancel, the corruption begins. Not always, but I can definitely duplicate it more times than not. It appears to only happen when the model is not at timeframe 0.
So the model node X scale seems to go to 0, making all verts move to x location 0. No amount of undo will fix it, and is more likely to burn it into the model ( in a way of thinking ).
If you then try to import an older model and attach to it to restore the shape, the scale gets even further messed up, making some kind of weird jiggle when animated, as mentioned above. Something in the model then sets the X scale to any number between 0 and infinity, but if you move the slider, no scale is shown in the GUI. By this time, you are stabbing your own heart out.
So how do you get out of it without having to go through all the crap I mentioned above? Simple:
1) Select the flattened offending model node
2) from the maxscript rollout (I'm using v0.8b60), on the first panel (General Utils) click the "IntoDummy" button.
3) The node will transform into a dummy, removing all animation on that node. You don't want that.
4) Now hit undo and it will back up one step inside the IntoDummy script, which restores TWO copies of your fubar model, but in a restored shape.
5) Select the cloned model node which DOES NOT have animation keys on it.
6) Delete that duplicate. Doing this will unlink the node<>parent structure.
7) Select the unparented child nodes and reparent them to the restored node.
Done! Easier than doing all the stuff I went through yesterday.
I hope nobody actually has this problem in the future, but at least the fix is simple.