Hi fellow Oregonian! Sphag moss has it's uses, but IMO it's not the best medium choice for the Pacific Northwest. It's going to stay much too wet. Especially for Phals. I have my Phals in a CHC/perlite/charcoal mix that I make myself and S/H. It keeps things open and airy, but retains a little more moisture than fir bark. The semi hydro phals seem to be doing OK. You absolutely can't over water that stuff.
I would go up a pot size, JMO. I think they like to stretch their legs a little.
Don't leave it in the sphag. From the pictures it looks like you have some root rot started already.