The leaf says your tree is suffering from chlorosis, usually caused by a nutritional deficiency. If available where you are I would recommend a citrus labeled fertilizer, if not use a fertilizer recommended for Camellia. The spots on the leaves are a fungus and have to do with the environment should not become a serious problem. Fungus gnats in the soil are easily controlled with BT. Available as mosquito larvae control. I would stop using what you are now. Al

I agree with Keriann. Yes, you should really let them dry out. Matter of fact, once my seedlings are as big as yours, I let them dry out pretty much all the way before I water again. You can tell they need watered when you pick up the flat and it feels light as a feather. Then after you water, it's much heavier. Your method of bottom watering is quite unique, I must say. I think that most folks bottom water the way I do, which is to say setting the cells or cups into a tray of water and letting the plant absorb as much as it wants until you see moisture on the surface of the soil (usually takes anywhere from 5-20 min). Now, I can't say for sure what positive or negative effects your method of watering might have, except that it sure sounds like a pain in the hiney to me, and I somehow doubt that the soil is getting properly saturated. You want to simulate mother nature; a soaking rain. Then you want to let the soil dry out. That's how it is in nature. Roots need water yes, because the plant needs water, but then they need to dry out and get oxygen. Damp soil all the time = no oxygen to the roots. Now, I can't say for certain what part of your program is causing your issues, but I would start bottom watering them as described by letting them absorb water sitting in a tray. I think you will find that using this method, you should only have to water every 3-4 days, or less. I would lay off the ferts for a while, and then make sure only to fertilize when the soil is already damp, or you will burn the roots. I just mix the fert with water, then pour into a tray and bottom water as usual. Give this a shot, see if that doesn't help.

When a peony starts out looking good, and then all of a sudden starts to burn up, turn brown and eventually decline, it is usually a problem with the root system. It can either be caused by bad drainage, over-watering, drought, poor draining soil, fungal diseases, or a number of other factors. The best way to ensure that you get a very good start on your peonies whether it is herbaceous, itoh, or tree type, is to have them potted up until they become very well established in their pots. This helps them handle the conditions of being planted in the ground much better.

Plants have their own sense of time that isn't measured by the hour hand on a clock, rather, day length (technically it's the length of the dark period) is what the plant pays attention too. When the day length signals the plant to grow, and other cultural conditions allow it to grow normally, your plant should from that point forward start producing healthy growth. It can't 'repair' the damaged growth, though that will eventually be shed and forgotten as the plant grows. What you're seeing is probably the result of an ongoing shedding process that may well have been instigated by conditions that affected the plant even before you acquired it. Your very best coursed of action is to make a good plan that A) ensures good root health B) takes advantages the plants more robust periods and makes allowances for when the plant would be better off without extra human generated stress C) has you ensuring cultural conditions in the area of light, temperature, and nutrition that subject the plant to the lowest level of stress you can comfortably manage. Fortunately, these things are much easier than they sound, but it's not realistic to expect to see the results of your efforts in a month or two. Choose a course, stick by it, be patient. If the course is a good one, your plant will cooperate. If it's not, it will let you know. Al