Down in Flames

Well, my ten-game undefeated streak has been snapped in ferocious fashion - I even lost down, something I almost never do.
One of my repeat opponents, little James Lung, pulled a surprise in the opening and, well...

White: Joshua Haunstrup (1880)
Black: James Lung (1794)
Event: MCC Independence Day Swiss (5)
Date: 2007-07-31
(C63 Ruy Lopez, Schliemann)

1 e4 e5
2 Nf3 Nc6
3 Bb5 f5

The Schliemann Lopez is very tactical, making it a good practical choice against most players, but I have always known it to be rather dubious, and having played it myself with the black pieces on and off, I thought I had a pretty good feel for the variations. Thus, instead of ducking the challenge with 4.d3 or 4.Bxc6, which I am sure I should have done, taking stock of the fact that it had been a long time since I had studied the opening, I decided to dive straight into the main line:
4 Nc3 fxe4
5 Nxe4 d5
6 Nxe5 dxe4
7 Nxc6 Qg5
8 Qe2 Nf6
9 f4 Qxf4

Here we are then, 9 moves of theory, and what's going on? The position is sort of irrational. White has some threats with the knight on c6, and black has some tactical ideas so long as white's king is still in the center. This is where I lost the clarity of the theory. In the past, I have played Nxa7+ which isn't supposed to grant much in the way of an advantage for white, but which I think is actually quite strong in a practical over-the-board situation. The main move is Ne5+, but I thought that I could interpose 10.d4, which seemed natural and strong. Then, after 10...Qh4+ 11.g3 Qh3, I could go back and play 12.Ne5+ and we would transpose. I kind of thought that 10...Qh4+ was the only reasonable reply to 10.d4, so you can imagine my surprise when James whipped out 10...Qd6. I guess that's partly why the Ne5+ comes first, because the queen is so nicely situated on d6, and this is still a theoretical position, though I don't really understand why, because it seems downright dubious for white if you ask me. To make matters worse, I naturally assumed that 10...Qd6 was a mistake of some sort, since I new it didn't happen in the main line, so I started to consume gobs of time trying to crack it.
10 d4 Qd6
11 Ne5+ c6
12 Bc4 Qxd4!

This is the simple move, but it's not even in the book that I have! Everybody in the past seems to have played 12...Be6, but James knew better. Afterall, my threats on f7 are really pretty weak. I'm never going to have time for Nf7, and this only really began to sink in now. I wanted to play Bf7+, but I think that this just gets a piece stuck on an awkward square. No, all in all, the white position is already really untenable. For example, 13.Nf7 Bg4 14.Qf1 is getting really frightening, and is in danger of being imminently embarrassing.
13 Nf3 Qc5
14 Ng5

Right about here I actually had this funny notion that I was back in the clear and had threats that were meaningful, but this is just an illusion. The truth is, black has threats and is up a pawn.
14... Bg4
After this, I think that my original intention had been to play something like 15.Qf1, but after 15...0-0-0 things are turning south fast, and cheap tricks like 16.Be6+ aren't going to save me. Hence, my move, which I think Fritz agrees with, though it does seem to salient a bishop pretty badly.
15 Bf7+ Ke7
16 Be3??
Given my nervous state at this time, all the energy I was putting into trying to figure out exactly how and why this position had arisen, I think that a blunder was kind of logical, but ouch, this one's really ugly. I had even calculated the right move, 16.Qc4 several time over, I just didn't want to play it. My logic was that having just forced James to misplace his king, just about the only thing I had going here was the dim potential of some kind of tactical shot off the monarch, so I really didn't want to take the Queen off. After 16.Qc4 we'd be in an endgame or queenless middlegame where his extra central pawn would have been the topic of discussion. I think that he'd have pretty good winning chances, and at the least he would have made me hurt for a long time. Instead, after,
16... Qxg5
It was time to resign: 0-1

It's hard to know what conclusion to draw from a disaster like that. I had just played James a few weeks ago and beaten him rather convincingly, and the sad thing is that I had a nice piece of preparation waiting for him in his old main opening variation. It's logical to blame the opening line for the bad position, and I do think now that 10.d4 must be rather dubious, or at any rate, fairly untenable. I'm just amazed that it has such pedigree - no less a player than Kamsky has played it - so I'm going to have to Fritz it more and see what I can find. The strong masters seem to reply to 12....Qxd4 with 13.Bf7+ Ke7 14.Bf4 and then the black player plays 14...Be6 afterall, which seems very inconsistent. What I don't understand is why black doesn't just double down and play 14...Qxb2 15.0-0 Qc3 and thumb his nose at white. It looks ugly for black, but I can't see any way through for white. Can anyone else?
Certainly, in my game I blundered, and blundered badly, but I think that was a product of the situation, of the bad psychological state you find yourself in when you have tried to refute something that haven't seen before and it isn't working - it can be really hard to change gears from trying to punish someone to groveling for a draw in a lousy position.