You should really take the gauze off the peat pucks, it can restrict root growth big time. Just snip down the edges with scissors and it will peal off. You should bury them a little deeper too, they will root out the stems. Have you tried bottom watering? IMO its the ONLY way to go. Lay off the fertilizer for awhile and just give them good water, most potting soils already have fertilizer in them, you might be over doing it. If you tap water is bad, use some bottled water or collect some rain water.
If you are going to bottom water, here is what I do. Pour water into the pan around the pots and let it suck up water for 15 minutes or so, if its all gone, good, if not drain off the excess. I prefer the disposable cake pans from Walmart, 3 for $2 for the 9x13s! You should just be able to see the top of the soil getting moist. When the soil starts to pull away from the pots water them again.
