At age 56 with a drop that big in two years, my guess would be that it coincided with estrogen levels dropping in your body. You could take a chance on it stabilizing with your diet and exercise routine, but if it doesn't, then you're two more years down the road with a lower score. In and of itself, a -2.0 at your age isn't as big a risk as it would be with someone 20 years older. But...if continues to stay around there as you continue to age your risk will increase.
You say the Fosamax didn't improve your score. But did your score decrease by a significant amount as determined by your testing center's precision study? You see, it's not always about improving your score. It's about reducing your risk for fracture. In our osteoporosis center, we believe that no loss is good. We categorize our patients as stable.
At the point of a -2.0, exercise and diet alone will not improve those scores. What you need to do is look at your whole risk for fracture, including your FRAX score. It may be that at this point you can forego meds and keep your numbers the same without fracturing. However, a fracture changes that whole picture.
As for your spine - I wouldn't advise any forward bending or twisting. It's the small daily repetitive movements that wear the bone away and cause tiny breaks in the struts. You don't feel a thing until the vertebrae collapse. Then there's no going back. Why chance it?
We don't advise our patients to do Pilates. There's way too much risk involved there. Even though your spine is in the normal range, your hip isn't. Who's to say your spine won't deteriorate like your hip soon? Caution is the best policy for you now.