>> I am thinking the paper trays stayed too wet.. so I will place blame on them
I know this is an obsession of mine, but I always distrust a small, shallow cell if the mix is water-retentive. I always fear that some water will remain "perched" in the bottom inch or so of the cell. If that batch of coir is pretty fine, or just has more fines than usual, it might be retaining too much water in the lower half of a shallow cell, and excluding air.
Also, in general, fine mix plus roots not yet extensive suggests to me that even slight over-watering can drown a roots that lacks enough size tgo "drink itself above water level" .
If I overwater a big sedling, it can pull enough water out of the soil to let air back in, if it has to. But a little tiny plant with even small roots? All it can do is drown, or refuse to send roots down below the water table.
YMMV
