Hopefully someone familiar with the allelopathy of hemlocks will see this. You read more about it than I did already. If the crux is that hemlocks are poisonous to some other kinds of plants, there should be a list of those known to be sensitive just like there are lists of plants sensitive to the juglone of walnut trees. If hemlocks are only poisonous to others of their own kind, that shouldn't be a factor in any struggles your other plants might be having.
I might try backing off to watering every other day and see how it goes. The less you coddle a plant, the more quickly it can become self-sufficient.
Yes, a tree can be very greedy about moisture. You can drastically improve the soil by periodically adding organic matter to the surface, whatever you have, whenever it presents itself. Material like kitchen scraps, grass from mower bag (whenever you mow before grass has made seeds,) leaves, pine needles, actual compost, more mulch (though may not be necessary, depending on whatever else you might have available to use "as mulch.") In a surprisingly short amount of time, this will help prevent moisture loss through evaporation, allow water to soak in more easily and deeply when it does rain, and add tilth and fertility to the soil. Looks like a mulch is in place already, which is good, keep adding to it!
More about soil improvement:
http://permaculturenews.org/20...
There was nothing but hard-as-a-rock ground under loose sand around these trees a few years ago. It was so hard, it wasn't possible for me to dig a hole. I've been adding organic matter to this spot and the change is dramatic! It's not hard to dig at all, and the soil is dark, plants don't get thirsty unless it doesn't rain for a few weeks.
Another example from when I used to live in OH. This spot was in baking sun all day, but just a year after covering with mulch and tons of fall leaves, I didn't need to lug the hose around except for the potted plants:
