Never had much luck with peat pots for peppers. I buy peat and perlite mix them together with water then put it like a cake in a tray. Lay the seeds on top and put peat over that. Loose and aerated yet moist is what you're aim for. Slightly pat it down to give the seeds something to leverage against. I use a humidity dome and heat pad as well. If you have to use the pods then loosen them up as much as you can by stirring the peat in the fabric bag. If the roots have gone through it then leave it otherwise get rid of it. I see those fabric bags in my yard from peat pots years after I use them. I throw them away at that point.