Booed and jeered as he took his place in the visiting dug-out, the fiery Scot's day soon got worse as Forest fell 3-0 behind by half-time thanks to Ross Wallace's breakaway effort, Callum Davidson's penalty and Matt James' stunning piledriver.
Yet Davies hit back and said: "I was very proud coming back here and always will be, being the most successful manager in its history.
"I know that underneath that energy and desire to win the game there's a huge amount of respect.
"They will sit back in their lounges and kitchens tonight and as much as they shout and bawl, they will certainly appreciate what took place not only here but also at Derby.
"The atmosphere was the same when I went back to Derby with Forest.
"But where is the morality and respect in football nowadays?
"You're only as good as your last game in this business and people forget very quickly, especially when they don't know the facts.
"But whether they like or respect me, I will still sleep tonight.
"I know from the letters I've received not only from here but also Derby, there has been respect from many people and great admiration for what has been achieved."
Forest improved vastly after the break and Dexter Blackstock hit back for Forest with a 57th-minute penalty before substitute Robert Earnshaw cut the gap further with 14 minutes remaining.
Yet there was to be no equaliser for Davies to savour as Forest were condemned to their fifth successive away defeat in the Coca-Cola Championship.
Davies' players struggled badly to cope with Preston's first-half vibrancy and the Forest boss added: "It started in the warm-up.
"Our warm-up was atrocious and having watched that I was concerned because it was sloppy and slack.
"There was no tempo and we just didn't start, but there's no doubt that the home side thoroughly deserved their victory because they competed better than us and won second balls better than us.
"But in the second half we changed it around and totally dominated.
"We should have got something out of the game and if there had been another five minutes I think we would have got another."
Preston led in the 20th minute when Neil Mellor embarked on a strong run down the right flank and Wallace, who drilled a fierce low shot into the net from the edge of the 18-yard box.
Nine minutes later, Forest defender Chris Cohen was adjudged to have tugged at Billy Jones' shirt and Davidson dispatched the resultant penalty with a well-struck left-footed penalty.
The visitors showed little as an attacking force and in the 32nd minute Preston struck again with a brilliant goal from on-loan Manchester United midfielder James, who unleashed a venomous right-footed shot which flew into the top right-hand corner.
Forest hit back through Blackstock and Earnshaw but Preston held on for the victory and boss Darren Ferguson could not hide his delight.
"It was an unbelievable performance in the first half," said Ferguson.
"We didn't want half-time to come and it could have been more than three.
"But I was confident today and I'm not being arrogant.
"We've just annihilated a team who are third in the league.
"At home, if we are at it, we will give anybody a game."
Ferguson - who was forced to withdraw defender Youl Mawene in the first half due to a groin problem - said the return of Davies had not given his players any extra motivation.
"It's just coincidence - it had nothing to do with it," said the Deepdale manager, whose side host a Sheffield Wednesday managed by his predecessor Alan Irvine on Tuesday.
"In football people come and go but I think Alan Irvine will get a good reception on Tuesday."