I have not been over watering...planted them up in 3 inch peat pots. I bottom water them until the peat pot is wet and then don't water them again until the soil and pot is bone dry and some of the seedlings start to wilt just a little.

I know you don't think you are over watering but you are or the leaves wouldn't be yellowing. And the peat pots are contributing to the problem which is why many of us won't use them - ever.

The peat pots wick water up too quickly and then wick it away from the soil and the plant roots thus forcing you to water more frequently. When you water until the pot is wet it is too much water for the roots and the leaves yellow. Then the pot dries quickly and begins to pull the water out of the soil drying it out and making you think you need to water again.

If you cannot get rid of the peat pots and move the plants into plastic cups which is the recommended solution, then you will have to water them from the top using a small watering can so that only the soil itself is watered until it is only slightly moist. Make sure the pot gets little of it. The check the deeper soil moisture level, not the pot condition, before watering again.

Going from real wet to bone dry should be avoided at all costs. You want a consistent LOW level of moisture in the soil.

Hope this helps.

Dave

PS: lots of discussions about the many problems with peat pots here you might want to read for future reference. And do be sure to strip it all off the plants before transplanting them.