Peter W, (also Terry Fairfield, Burgess, Bailey, and Excell) and other authorities will suggest that bacteria and other organisms which might cause dropsy-like conditions are always in the tanks. They are largely benight until sonething upsets the fish and or lowers the water quality to a certain critical point.

There is actually a pretty long catalogue of critters that cause similar conditions, which is why once in a great while a fish can be rescued from dropsy, while usually they are so damaged from the injuries to internal organs, that they will die anyway. Fairfield surprised me by suggesting that bacteria are usually opportunistic parasites, but not anywhere nearly as damaging or effective parasites as the worms or crustaceans that give them their entry into the animal. He also suggested that there would be virtually no bacterial attacks, if the water was always kept at an optimal level.

Ironically as your guppies were eating more, it may have been necessary to change more water. When they stop feeding or hover by the bottom, like you describe, it is time to start doing more water changes, even daily 20-40% water changes if you can prepare water that fast.

This story has been spun before on GL, so if it looks familiar to anyone reading, skip it. ;)

We had mature five "dwarf neon" rainbowfish in a 20-gallon tank, when a family emergency took most of our attention. About ten days later, as we caught up on work and home responsibilities, more could be done for those rainbows than drop a little flake food in the tank. In the meantime one of the five had begun shimmying in the middle level of the tank. The next day he was "parked" on the bottom of the tank and one of the females was then shimmying in the middle of the tank. The third day the male was dead, the female was huddled on the tank bottom and another member of the former quintette was shimmying.

Fortunately we had a 32 gallon container of our tap water seasoned (in that it had sat for two weeks). Normally having a little sodium chloride in it is not appreciated all that much, but it seemed like a good thing at the time. (One of the reasons that shops use salt is that it delays nitrate and nitrite poisoning in crowded tanks. Notice, I didn't say stop it, just maybe put it off, maybe until a customer buys a fish with burned gills.

By the time of the first 40% water change, the female was dead, the shimmying fish was on the bottom and the fourth adult was shimmying. The day after the first water change, the shimmyer was ok and feeding again, lightly because that was all I dared feed them. The fish that was on the bottom of the tank was back to shimmying. There was another 40% water change. The third day of water changes, the three surviving adults were, at least tentatively, cruising the tank. A 40% water change was made anyway that day and the next. The next week they got their usually scheduled water change. A couple days later there were small fry cruising the surface. Since a spawning fish is usually a "happy" and healthy fish, life in that 20 had returned to normal.

That was an unusually quick success associated with dealing with health problems by changing water in a disciplined manner. Would that things already worked out so neatly. But it suggests that water changes in and of themselves may enable a fish's immune system to reassert itself. Without water changes, medicines may be useless. The junk and bloom of organisms in the water both need to the thinned out.

Another Fairfieldism: use of a diatom filter may filter a lot of Ich, maybe velvet and other larger organisms out of the water. Water still must be changed to improve the H2OQ (water quality), but the fish are given some grace time to recover before their gills are smothered with parasites.

Since the mass of the adult population had dropped 40% in that rainbow tank, there was room for more fry on the surface and lower waters. That same adult/ fry continuum can be seen with guppies and other fishes too. Populations will reach an equilibrium. "Something" (culling by the aquarist, cannibalism, moving fish to another tank, improved water quality or epidemics) will keep the fish population at a level where some can thrive.

More than enough fry, for the conditions will be eaten. More than enough adults for the conditions and health issues will thin them out

So the first step is to improve the water with frequent, partial changes. Then a skin conditioner  (Melafix or Primafix) and/or a medication (anti-biotic in this case) might be used. But all of that is not designed to entirely cure the disease really, just to help the fish to heal itself.

By the way, a couple of days ago, I discovered a couple small fry, in a small, out of the way container, which have dropsy and will be put down with that clove oil. Even young fish can be hurt by neglect. You are not the only one of us to encounter this. :)