That's bad luck about the writer going off and competing with you, unfortunately there isn't much you can do about it, but I guess it's something to consider for the future. If you have a good site ranking well in it's niche, then always make sure the site has so much content that to compete against it would be difficult for any writer unless they have deep pockets.
As a writer myself, I tend to find that most of the people who employ me are in niches that I actually have no personal interest in. That doesn't mean I don't put 100% into the articles I write, but I really couldn't see myself ever wanting to compete with them.
As to increasing traffic and conversions of our existing sites, I think it comes to the niche you're operating in, do you already dominate the niche, or is there room for your sites to grow? If you already dominate the niche then increasing traffic is going to require growing the niche, and that basically means thinking outside the square and finding new markets for the same product.