It's normal for these to have hardly any feeder roots, so they need to be shaded and partly defoliated when transplanting. Are the yellow leaves diseased? Maybe they are turning fall color and preparing to drop as the plant goes dormant. I would preserve the long fleshy root if possible, as it contains nutrients that will help the feeder roots grow out. I would plant it in the garden with temporary shade and keep it watered. It may look dead until spring and then grow out nicely.

Use Neem oil. It has to land on the caterpillar to kill it but if you spray often it should work. It is a non-toxic, non chemical, earth friendly spray. Here's what wikipedia says it is-- Neem oil is a vegetable oil pressed from the fruits and seeds of neem (Azadirachta indica), an evergreen tree which is endemic to the Indian subcontinent and has been introduced to many other areas in the tropics. It is perhaps the most important of the commercially available products of neem for organic farming and medicines.

That's neat. I, too, can't wait to see what happens. We were driving somewhere, and passed a "stand" of some sort of large leafed plant (couldn't identify it as we went by at 60mph) that were all super light colored, a yellowish-white. On the way back, I looked to see if they looked sick, and none did - they were just white. We also have some sort of white-flowered weed that grows all around (produces the "hitchhiker" burrs) that occasionally grows with variegated leaves, which isn't normal for it.

For me, there is no doubt that early pods will have an effect on the growth rate of a small plant, judging from what I personally witnessed with my own. I do think, however, that the magnitude of the setback will be heavily weighted by your growing zone. The shorter your window the more detrimental that setback would be. I mean, a few weeks could literally make or break your season if winter is on it's way. I'm lucky enough to have a very long growing season, virtually indefinite, and small setbacks tend to work them selves out over time but...I'm convinced that removal is the way to go - even with my long season. Now, growth rate debate aside...early pods just don't taste very good - mine didn't anyways - they were bland and boring and a waste of time. So for me, it's a no brainer, whether or not there is scientific proof that early pods stunt growth...why risk your plants health and potentially your seasons harvest for a handful of disappointing peppers. Not worth it, not for me. The approach that I took with the plants that I did remove buds from is based on the branching of the plant. I remove the pod that sets in the first Y. The plant will then have 2 branches that will set pods where they split - I also remove those. The four new branches will also set pods where they split, I remove all these as well. After that I let them go. At that point the plant should have adequate size, both above and below ground - and 8 new branches primed for fruit set. In the plants that I did this with I saw an explosion of pods on the next round - and as I said - the plants that I let go from the start we're small and weak, until I removed the pods. Then they absoultely exploded as well. The proof is in the pudding, as they say...and that is about $240 worth of pudding baby.... PJ