Yes, your posts will all lose their ranking and start over from zero. You lose pagerank as well. And your Technorati rank. This is why it’s best to make the domain name committment as early as possible in a blog’s life.
To forward your traffic from your old blog to the new one, the only thing you can do is add the domain mapping upgrade to your wordpress.com blog by pointing the new domain nameservers here and adding the domain. Then you would “put blog here” in the domains portion to the new domain and then change the name servers back to your new host.
That or put up a page or last post that tells everyone about the new address, but that won’t help with the traffic.
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