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It doesn't look particularly related to this news, to me. It's been bouncing around $1000 for days.

http://bitcoincharts.com/charts/mtgoxUSD#rg60ztgSzm1g10zm2g2...

Someone else posted a chart of the price in China, which does look like a "plunge" though the scale on the image is somewhat misleading (it also only "plunged" 17% or so).

I'm having a hard time viewing this level of volatility as surprising for Bitcoin. It's had a number of much larger drops, including recently (when it climbed to 700 and dropped back down to 500, for instance, on no news). I believe one has to view Bitcoin in the context of Bitcoin, and right now it is an extremely volatile creature.

in any other situation a 20% drop in value would be considered a "plunge" I think

The thing is this is relatively "normal" volatility for Bitcoin. It bounced up 80-90 points again briefly at my broker a short while ago. Back down. Up 50 or so points again since then.

It was over $1200. 17% drop in an hour or 2? That's a plunge.

Is it still a plunge if it's going to be followed by soar?

Yes.