ok ... a couple of questions:
how long have you had continuous employment with them?
why are they advertising when you've been doing the job for x number of months/years?
what is the rationale for lower salary?
how different is the jd of the advertised role to your current role?
Sounds like they are trying to avoid you suing them for constructive/unfair dismissal by going down this route Susie!
You have to weigh a few things up:
if you apply and are successful - seems there's no guarantees though - can you build in 2 days working from home which is a very valuable 'perk' to have?
there ain't too much 'out there' at the moment, and you are always better placed to get a new job if you are already in one
go all guns blazing for this role - despite it being down-graded and lower salary - so that you don't give them any reason to say you're not the right person for the job
At the end of the day, it looks like they are trying to restructure through the back door - which isn't acceptable but which they probably think avoids them paying you any compensation.
Let's meet up when you're back from Italy so that you have all your ducks in a row.
Don't think about it now as you can't change anything. Italy beckons and will be fantastic and amazing - I wish I was going with you!!
xxx