Sabrina,
Why does the bed get narrower as you dig deeper? I understand that there are some foundation elements along one side, but what's on the other?
Is it a trough formed by bedrock or concrete? How deep have you dug?
A good soil contains a mix of sand and clay particles, plus about 10% organic matter. I'd stick with what you have, just continue to amend it as you go. Your other daylilies seem to be growing very well in it. Don't make any drastic changes to your growing bed just because a few tiny seedlings didn't handle transplanting very well.
An in-ground bed consisting of bagged potting mix can be very hard to manage. It may not hold water or nutrients as well as the native soil, it may not have the same capacity to release those nutrients to the plants, and won't come close to providing the buffering that "real" dirt does. In other words, pH, moisture and nutrient levels may fluctuate widely. Also, because potting mixes are largely organic matter, it will decay and shrink every season, eventually turning into a finely-textured muck. It's not generally good to have a lot of organic matter buried too deeply, as it tends to pack and anaerobically decompose.
As Sue mentioned, during periods of heavy rainfall, runoff from all of the surrounding clay will run into and flood the potting soil "cistern". Also, at the bottom and sides of that cistern will be a clay/potting mix interface which will be resistant to percolation. In your case, the underlying concrete and rock around the bed will make it worse.
Before chelates were popular, many (most?) iron supplements were in the form of iron sulfate. I think that the idea was to not only supply extra iron, but to attempt to correct any high pH condition which might be making the iron unavailable.
The sulfate acidification process requires microbial action, which is probably why it was recommended as a long-term solution.
