Plants recover faster after transplanting when they have more established root mass. Your seedlings were barely producing their first set of true leaves when you transplanted which is way too soon. Roots simply coming out of the bottom is not a good indication. The root tips will die off when they start poking out of the bottom and then the lateral roots will grow, similarly to topping a plant. This is called root pruning and the reason many people use fabric pots. Once the root tips reach the edges of the fabric pot they die off encouraging lateral root growth. I only use fabric pots for my final pot though because transplanting out of them is a PITA.