What sort of media was your mini Phal planted in? A lot of them come in tightly packed sphagnum moss, which works well for greenhouses, but doesn't dry out well enough for home growing. Otherwise your growing media could be old and broken down and not allowing air to the roots. Another possibility is the pot is too large and the outside part is drying out, but around the roots it is staying wet - esp possible if it was repotted and any old media was left around the roots. Some store bought plants come with the original moss packed around the roots, then stuffed into more moss in a larger pot.
I doubt your dilute fertilizer caused root rot, not experienced with that problem. For me its always either the wrong media or lack of drainage, or leaving them in the original media they came in and it being wrong for my home. I'm not an over-waterer, though sometimes my Phals suffer from under-watering.
I'd try repotting it in an open bark media, personally I add some loose sphagnum moss as it is dry here and low humidity. Be sure to cut off bad roots, spray with a fungicide and maybe soak in Kelp Max solution (or similar product) to help it recover. Keep it on the warm side and continue to water when it dries out. Keep in a low stress area - not too bright, decent humidity - and since you say it has a new leaf and baby roots, it should recover.