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Something to consider: perhaps you min was already their max or a stretch for them, so your countering bumped you out of range.
You did nothing wrong, but unfortunately this does happen (thankfully, not often!). Countering an offer is totally appropriate. I know this job market is tough, but it seems like you dodged a bullet here.
I know how you feel. This happened to me once when I was unemployed and desperate for a job. I was devastated. I promise that it will get better.
I don't think you did anything wrong. As long as you make a counteroffer that's not seen as unserious, things should go well. If they're not filling the role that sounds like it has more to do with the economy than with you. A lot of organizations are hesitant to do much hiring as they're apprehensive about which way things are headed.
Yeah this one has just really sucked. I would have been so good at this job.
I doubt you did anything wrong. They either want somebody for very cheap or they lost funding for that role. Keep an eye they might be laying people off anyway.