Sounds like the circular ribbon fried. I had this same thing happen many moons ago with an old pair of Genesis Genre 1's. Same tweeter. I got some kind of a bad, high frequency oscillation and a little wisp of smoke drifted out the top. Back then, I did not know any better and thought I had to get a pair directly from Genesis. They wanted too much money and I declined to fix them. Now, if you look around you can find the same driver available to the DIY market for maybe $30-40.
Greg