Urgent. Please help!

I got an offer through a recruiter. The offer package is good, 20%-30% better than my current job. However, I don't like the firm location. That was why I tried to negotiate a better deal. I listed 6 terms in my counter offer letter, asking for improvements like higher starting salary, signing bonus, more vacation days, etc. My strategy was if they could offer me an even better package then I would take it. If they did not want to sweeten the offer, I may still accept it. In any case, I did not think the offer would be gone. I send my letter to the hiring manager without going through the recruiter. However, this caused problems: the manager complained about his awkward position due to my counter offer, and the recruiter blamed me on not sending him the counter offer first and I lost the best opportunity to negotiate a deal via the recruiter. 2 days later, the recuiter told me the firm would withdraw the offer and pursue other candidates, to my surprise. I waited for a couple of days due to Thanksgiving and wanted to gave up, but my wife insisted that I should try to contact the manager again hoping things would turn around. I did and the manager called back,saying they have not made their final decision yet and asking me to wait until next Monday - today. I of course expressed my interest in the job one more time and told him what matters most to me are the job responsibilities. This evening, I called the manager again and he said he would get back to me in a day or two because he need talk to some people. I was wondering if anybody has similar experience. Was my strategy wrong? Do I still have this opportunity? Is the manager waiting for another candidate to respond? I still have their offer letter in hand and like to accept their offer if they still like to hire me. Any suggestions would be greatly appreciated.