I had dozens of rue seedlings growing indoors under grow lights and made the mistake of placing the tray outside during bad weather to start the acclimation process. I lost most of them. I am going to be more cautious with the survivors which appear to be doing okay under lights. In my conclusion, the young seedlings are more fragile compared to other young herbs.

If the stems are 2 inches before the seedling leaves they need a lot more light. They are etiolated. The other symptoms sound like too wet, too warm and too little light. Any chance of a picture?

Out of curiosity, does the 2 inch rule apply for other seedlings or just rue?

It's not a 'rule'. There are few 'rules' in gardening. But it would be a reasonable surmise for many small to medium sized annuals and perennials.