RE: What does my motor "failure" tell me?
Sounds like a burned winding to me. Kinda like a V8 engine only firing on 5 cylinders...
According to Horizon's website, the Kv rating on the motor is 980 RPM/Volt. What you'll be looking for as a replacement is a motor similar in physical size and Kv rating to this existing motor. Horizon should replace it for you under warranty, though.
The 2836-10 from Lazertoyz has an 1100 Kv rating, which means that it will spin a prop at a higher RPM on a given voltage. You'll probably want to reduce the size of the prop to the recommended 9x3.8, or maybe a 9x4.7, to keep from overloading the motor. The stock 9.5x7.5 will definitely be too much for the motor.