First off, it sounds like you've done your research on this and have done everything pretty by the book. I'm impressed. The jury one whether or not the bacterial supplement helped is out (be VERY suspicious of bacterial supplements that aren't refrigerated along their entire chain of custody, very few living things are likely in it by the time you get it if they aren't), but it definitely didn't hurt.
How many times had you been testing the nitrate before you got the 160ppm reading? Was there a steady climb over a period of time, or did it go from very little nitrate to 160 in a matter of a day or two? If it's the latter, I would be likely to suspect testing error, which is much easier to do than you'd think. I'm doing a huge batch of ammonia and nitrate tests on some soil samples right now (using the same process and equipment you'd use for testing seawater... I really should bring some tank water in to the lab!) and it's shocking how easy it is to contaminate a sample. I had to throw out an entire batch of 30 samples because I had dried the extractant vials with paper towel, which quintupled results. doh!
If that's not the case though, and you saw a steady progression from day 9 to day 27 (5ppm, 15, 40, 55.... 140, 160 or something like that) I'd be more inclined to believe your earlier tests, and be suspicious of your most recent tests. I'd first try getting a second test kit for nitrate and seeing if it agrees with with a reading of 20ppm.
If it does agree, a sudden drop in nitrate could mean a couple of things in that case -
are you using sand? If so how deep of a sand bed? I don't think it's outside the realm of possibility that an anaerobic layer could have developed in your sand between days 9 and 25, but a drop of 140ppm in two days seems excessive even if that's the case. It's also possible that your rocks are starting to de-nitrify, though I have a hunch it would take them longer to build up such a capacity (if anyone tries to tell you they actually know how long it would take for such a de-nitrifying layer to develop inside dead rock or sand, they are grossly over-estimating the current state of knowledge on the subject).
Have you been lighting your tank during this process? I can fathom that a flush of even microscopic algae, diatoms, or other nitrogen consuming organisms would make swift work of available nutrients, but chances are good you would see evidence of them if they were present and multiplying fast enough to drop your levels so suddenly, is there any discolouration in your sand/rock/glass/water or any noticeable growth of anything with a pigment?
If the answer to all those questions is no... to be perfectly frank I don't think you need to worry about it. Without lab grade analytical equipment and some pretty insane-balls testing protocols, it's next to impossible to know what's actually going on in our tanks chemically at any one moment. Your tank started out a literal marine desert, with very little by the way of microbial life, so at that point, it's really very simple to figure out what's going on - ammonia is dosed at X concentration therefore ammonia levels in the water will be X concentration. However, over the past month your tank has developed a system wide functioning population of at least two entire clades of bacteria that are constantly reproducing, growing, and likely other clades of bacteria that are consuming the millions of them that have probably died since this started. Now the question of what's going on chemically gets harder and harder to answer - more balls are in the air so to speak, they're all moving, and the test kits we use are only the tiniest, highly simplified window in to a complicated process. It's like trying to watch an opera through the wrong side of an apartment peep hole. As more waste consuming and producing organisms from all trophic levels get added, the cause and effect of specific life-related parameters are going to become almost impossible to causally relate to one another. At the most macro scale you'll know that more food equals more waste equals potentially more algae, but if you look across tanks, and at a very fine scale, you'll start to see that the exact details of how much and what kind of food, how much waste, how much and what kind of algae often seem to fly in the face of what your snapshot in time chemistry tests seem to suggest should be the case.
To be perfectly honest, what your nitrate levels are at this exact moment don't really matter. What matters is that your ammonia cycle is complete, and I would probably agree that it's time to stop adding ammonia and look at adding a couple of hardy fish (chromis's are a good suggestion). Some people would wait longer, but the tank is going to have to adapt to the new additions whether you add them now or add them later and I don't think you'll see a dangerous ammonia spike if you add them now. You're eventually going to enter a phase where long term trends for available nutrients matter, but right now things will probably be all over the map as various forms of life enter, bloom, then fit in to the mini food web your'e making. If over the next few months your nitrate and phosphate levels stay consistently high, or you're getting persistent uncontrolled algae, you should probably look in to one of the systems that directly exports nutrients from you water - especially if you want to keep corals, but for right now, take the 20ppm nitrate on it's face value and don't stress too much about it, it will likely be different in a week.
My only other piece of advice is that if you are planning on someday doing some sort of carbon dosing, be that liquid or carbon, I would be inclined to suggest that you're better of starting it now than later. Some people on here will disagree with me, but I'm not saying you need to do it to control your current levels of nutrients. I've read a nauseating number of forum threads about nutrient control through carbon dosing, and one of the fairly consistent themes I've seen is that people who start doing it late in the game often go through a pretty brutal period of system shock, cyano outbreaks, and coral losses. I think that's why there's so many people who have sworn off biopellets for good. I've now added BP both late in to a tank's development, and right at the very beginning before any fish or corals were present, and I can say that the difference in outcome has been striking. I've got no research to back it up, but I think if you let your system evolve from day one with a carbon source, you can avoid many of the problems that are associated with them.
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