I'd tend to agree with the assessment of "Blown Struts" and subsequent "jammed onto themselves" so the suspension is completely collapsed and not rebounding at all. But, I would think that would result in a WICKED stiff ride - as in bone jarring/stiffest suspension you've ever seen type of ride. The fact that is it bouncy doesn't sound right unless the bounce is coming from the tires acting like rubber balls.
Definitely get the back end taken apart and check it out, but be extra careful around the struts/springs. If the strut is jammed and suddenly breaks free, you've got a LOT of energy built up in the compressed springs that is going to cause a real big problem.
BTW - when you looked at it, did it look like the springs are compressed or are the coils spaced out like the spring is at rest?