How to fix a Lion upgrade that killed SSH keys?
Ask your administrator to look at the sshd log. Or more likely you will need to ask them to run a second instance of sshd on a secondary port with debug turned on, doing this should tell you what the key error is.

sshd is quite a bit tricky when it comes to this, for good reason. On the server you are ssh'ing to, the administrator will have to run a command such as /usr/sbin/sshd -d -p 2222

When running sshd in debug mode, it will handle the first connection, spew out lots (and I do mean lots of output), and then terminate the server. Issuing -p means run the server on port 2222, which is necessary because it can't take over the default port of 22 where the server is normally running.

You will then have to run ssh -p 2222 70.32.90.120 (you don't need -v in this instance). The server's logs should then give you the exact reason that your private key is being rejected from the server. Note that this exchange may need to occur multiple times, because ssh is very stringent when it comes to security, and you may find multiple failures in the process.