How to reset values of elements in multi-step form
As I understand it, you don't need the ajax callback for the remove button. You should be able to do that with just using jQuery, and a rel attribute to hold the ID. Consider the following:

Add a class for the jQuery script and a rel attribute that holds the Step 1 element count id to the remove button.

$form['step2']['step2-'.$key] = array(
  '#type' =&gt; 'button',
  '#value' =&gt; 'remove ' . $key,
  '#name' =&gt; 'step2-'.$key,
  '#attributes' =&gt; array('rel' =&gt; 1, 'class' =&gt; 'remove-button'),
);



jQuery script to remove the "remove" button and reset the the Step 1 form element.

$('.remove-button').click(function(e) {
  var id = $(this).attr('rel');
  $('#element'+ id +').val('All');
  $(this).closest('.button-wrapper-class').remove();
  e.preventDefault();
});



This is (most likely) non-working example code, but I think you'll understand my point.