seeds Unable to sprout germinated seeds

So. Putting my pride away for now... first year growing from seeds for me, and it's not off to a great start.
Planned on the following peppers:
Corno di Toro
Mulato Isleno
Chinese Giant Red Bell
Aji Jobito
Fatalii
Bhut Orange Copenhagen
Jays Peach Ghost Scorpion
Chocolate Scorpion Long
Bishops Crown

Had a pretty decent germ rate, most near 100%. Used the damp paper towel in a zip lock method on a heat mat, and after they started to poke out, I moved them to a jiffy pellet in a domed propagator.
To get the jiffy pellet ready, I used warm water and then buried the seed root down about 1/4 inch deep. I didn't wring out any of the water from expanding the pellet, nor did I squeeze around to break up the peat at all, which I have since read is generally helpful. After seeing that advice (which was a week or so after sowing), i checked on a couple of the pellets to see if they were making any headway, and noticed the roots hadnt made any progress. Checked a couple more, same story.
I squeezed out a decent amount of the water, as they were pretty wet, and put them back in the propagator to see if i would get any change. After a few weeks, the only thing that has come up were 2 tomatoes that I also planted, both of which had already sprouted when I put them in the pellet. (Small victories, right?)
Tonight I dug back into the pellets, and everything has basically mushed off and died from the seed, except for one Corno di Toro that might make it.
Was too much water enough to completely kill all the seeds off? They were in domed propagators with a heat mat from the moment they hit the dirt, and little air circulation.
I'm going to probably ditch the jiffy pellets after reading a little more, and go with a good seed starter mix. For now I'm basically hoping some of my other seeds sprout while they're germing so I have a little better chance of not killing them.
It does seem like it's a little easier to get a seed to be viable if it's already fully sprouted prior to putting it in the dirt... but i know that's probably a silly way of thinking and don't just want to do it the easy way. I would just buy plants if that were the case.
Now that I have maybe 3 potential plants growing of the 50ish that I got to germinate, my real question is...
What the hell am I doing wrong here?

If you're using a heated propagation mat then there is no need for the paper towel method in my opinion. This is my first year not using peat discs but I used them for years and never had any problems. 

It sounds like the method you use for germinating the seeds works well. I use the same method either with a baggy or a lil cup. No sense in planting all those seeds if  they are not all goona grow. Seems a waste of space.
It is possible the peat pellets we're waterlogged and the seeds "drowned".
Another possibility could be too high or to low temps. Have you checked the temp of your propagation tray? or do you have a heat mat thermostat? If the temp gets too high it will cook them. too low and dampening off can occur easily.
In the past I have had a similar issue but due to fungus gnat larvae in my potting soil. They attack the tap root and the seeds turn to mush.

I haven't checked the temp, and don't have a thermostat. I didn't really see the need for it, since the mat feels relatively cool and the seeds germinated fine. Sounds like I may need to check that.

Is it possible to kill the germinated seeds in 5 or so days with waterlogging them?

I only use peat pods or just put the seeds in a good soil and not a "germination" method. Unnecessary step IMHO,  If the soil or pods are good and temps are right, mother nature will do all the rest. Be sure to keep an eye on the moisture of the pods or soil as you can over water and basically rot the seeds   Keep the heat levels right as well cause you can cook your seeds.  You will get the hang of it. 

Since I'm still new at growing peppers, I've found the paper towel/zip-lock bag method useful in isolating my mistakes.
 
This year, I'm doing about 50/50 split of germinating straight into potting mix as well as germinating with the paper towel method.
 
The paper towel method has helped me identify several batches of seeds that were nearly all bad.  Last year, I would throw these seeds straight into potting mix, and three weeks later when nothing is happening all I can do is scratch my head and wonder what I did wrong.
 
By germinating them on a paper towel first, at least I have an idea that I have good seeds, and any problems that come up have happened since I put them into the soil.

That was my main desire in using the paper towel method.

As an update, after making a few adjustments with soil moisture, I now have a baby Fatalli and Corno di Toro Giallo! I'm fairly certain I drowned the first batch out. I may go back to peat pellets at some point, but I have found it easier to just use a seed starting mix for the time being until I am a little more comfortable with what I am doing.
Thanks for the responses!

Last year I tried various different methods but this year I am exclusively germinating on paper towels in plastic takeaway boxes, then transferring to Jiffy pellets, then potting up a couple of weeks later.  It probably seems like a lot of extra work to some people, but I'm not growing hundreds of plants, and I like to see the instant they pop!  I've had really good success rates with this method.
 
I have found that if I transfer to the Jiffy pellets as soon as the seed sprouts, quite a few of them don't come up.  So now I leave them on the tissue until the root is slightly more developed and the stalk starts trying to loop.  I still find that sometimes an apparently-germinated seed doesn't progress.  I plant them in the pellet with both the root and the seed downwards in the soil but the top of the loop just showing at the surface.  I keep them in a propagator for some gentle heat, with the lid on until the cotyledons emerge, then I leave the lid off for ventilation.
 
I think you need to try different methods and see which works best for you.  Last year when things didn't germinate, I didn't know if it was me or the seeds at fault.  This year I have been successful with 12/13 chinense varieties including superhots, 3/3 pubescens and 4/5 baccatums so far.  I now have confidence in my methods and am sure that the 1 chinense and 1 baccatum which have failed are down to non-viable seeds and not my method.
 
 

I have had mixed results with the seedling sprouts via coffee filters in a bag.  Not sure if some varieties may need 3 weeks, but it is making me wonder.  Had some recently go off within a week (Coyote Zan While), while with others I still check for tails daily.  Have them in bags and use a lamp to add heat to foil cover, but they are all isolated in a baggie. I am also using coco coir for the media once we start.  At that point, I did previously experience heavy losses after a good germination, which I attribute to over-watering.  That seems to be the difficult fence to balance upon, for me.  Getting them to get a few sets of true leaves is the laborious part.  Once there, I have transitioned to bottom-watering, which seems to be working here. YMMV.

I was gonna reply here about the method I use but thought everyone might like it so I started a thread here http://thehotpepper.com/topic/67306-another-seed-starting-method/

EMN1-SS said:

I haven't checked the temp, and don't have a thermostat. I didn't really see the need for it, since the mat feels relatively cool and the seeds germinated fine. Sounds like I may need to check that.

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. I didn't see the need until this year. Adding a thermostat to my heat pad literally made the biggest difference out of everything I changed this year. Unbelievable germination rates once I locked in 85 degrees. I'm using a herpstat 2 controlling two pads