You should build links to the current page - this way none of the link juice is "dampened" by the 301. You might consider building links to the root if you think you might at some point decided to remove the 301 that links the root and the directory. When possible though, you want to link directly to the page that needs to receive the juice.
As far as your change in PR, it depends on when you saw the drop. It isn't uncommon for your PageRank to drop to 0 or a grey bar when you make a big change. It is usually restored within a week though. When you do a 301 though, it would usually just add on to the value and authority associated with the page you are redirecting to. Though it is difficult to say without looking at the site, I would guess that your PageRank would go back up.
