from my understanding with weaning this way using formula (i can't be totally positive as i did it bfing so hopefully someone else will chime in here
) that b/c your lo isn't getting as much nutrition from the formula b/c it is watered down that he will start taking in more calories during the day so be sure you are offering more kwim?! eventually as you keep watering it down he will stop waking for it - in theory that makes sense to me anyway...so keep doing what you are doing - good job!!
is your lo getting a bottle first thing in the morning? i would try offering it then rather than later before the nap...is lo feeding to sleep or how is he going down - what is the sleep ritual day and night??
how long is lo sleeping for the pm nap?? i think you could stand to extend that morning A time some..i know my lo can usually do approx 3.5hrs A time before the first nap - although that's not saying your lo 'should' be able to do that long as they are all different...but i think if you were to slowly extend it some it would help. if your lo is getting too much daysleep it will def affect how restless he is at night and also cause wakings/early wakings - how much total day sleep is lo getting at this point?
i will be off til sunday night at least but will get back to you as soon as i get a chance.
good luck in the meantime!