A couple of things sort of jump to my mind right away. First, pull the piece of live rock out. The organisms inhabiting it will NOT be able to tolerate the drop to 1.009 so they will die and rot and cause ammonia. The sponge is a good idea, I would take it down to 1.009 a little slower, maybe take 2 days to get there, that will help make the most out of the sponge as it too will become useless at those lower salinities. Unfortunately, you're going to be stuck with a cycle, no two ways about that. You can mitigate with "Prime" and water changes.
Secondly, what other fish do you have in your display? I would consider your whole display infected with Ich at this point, you need to get all the fish out and into either a low salinity treatment like the tang or a copper based treatment tank and leave the display fishless for 6 to 8 weeks. Otherwise the tang will be infected again as soon as it goes back into the tank.
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