Now either mass conversions occurred or the coast was now clear for inactive witnesses to return to the fold. Which is more plausible?
Both are plausible. I think both reasons account for the increase. I don't see why it has to be one or the other.
*to add -
I'll admit the 22 000 may be overblown by about 2 000. Penton 2004 (Jehovah's Witnesses and the Third Reich: Sectarian Politics Under Persecution) reports 20 000 witnesses in 1933 which aligns well with the memorial attendance (25 000) which is always a greater figure but is also a good indicator of approximate adherents. The Watchtower has historically been pedantic about the memorial figures. I took the figure of 20 000 and 25 000 and took an average and then rounded it down.
James Penton is using figures given by the WTS.
Marley Cole, in his book The New World Society, gives the figure for JWs in Germany in 1928 as 9,755. That number also originated from WTS records.
It does not seem plausible that the increase in Germany during the five years between 1928 and 1933 was over double. If the WTS numbers are to be believed, then you also have to believe that there were 12,245 Germans who converted during those 5 years - almost 2500 per year (using 22,000 as the number in 1933).
Oh well...maybe the Germans were really receptive to Rutherford's message after he disrupted the German Watchtower in 1925, causing a major schism in the religion.