My teacher's been telling me to decrease the pressure I put on the keys to play notes, and "play with economy" (fingers close to the hole and pressing as lightly as possible. I'm okay with the keeping fingers close to the hole, but playing lightly i a problem for me. When I try to play lightly, some fingers tend to go down faster than the others and messes up my playing. On a scale of 1 to 10 (10 being very hard) i would say my pressure is about a 7.

This is a common problem with technique change in many different fields - when you change one thing, everything else falls apart. Even simple techniques rely on a complicated coordination of many muscles in the body and patterns in the brain. Golfers will often get much worse for a time when they try to improve their swing. Martial artists lose power and balance when they adjust a kick.
Best I can say is to be patient, and accept that things will be difficult while you retrain you body to work this way. As long as your teacher indicates your technique is on the right path, you should be happy with the results when you get to the other side.

I am wondering if your flute needs service and the pads are not sealing well. That would encourage you to close the keys very firmly to force the flute to play.

Thanks watcher, I needed to vent some of my frustrations. It's just that I've been pressing too hard for 6 years now (I just switched to a new teacher, who pointed that out immediately).

I've asked my teacher if my flute has problems, but she played it and said it was fine. I usually bring my new Muramatsu EX, which has a better mechanism than my dad's Powell that he got in the 80s.

Pieces I could once play quite well now have their runs in tatters, and I have to decrease speed by more than half. Should I stop playing pieces for awhile and focus on scales and studies?

My teacher's been telling me to decrease the pressure I put on the keys to play notes, and "play with economy" (fingers close to the hole and pressing as lightly as possible. I'm okay with the keeping fingers close to the hole, but playing lightly i a problem for me. When I try to play lightly, some fingers tend to go down faster than the others and messes up my playing. On a scale of 1 to 10 (10 being very hard) i would say my pressure is about a 7.

A few comments.
1)I'm going to assume that your flute is working properly. If you suspect that it has leaks then have it checked over by a competent repair person.

2)To learn coordination technique it is often better initially to work from larger to smaller movements. This may involve raising your fingers higher than is really necessary. Doing this exercises the "extensor muscles" of the fingers. That is not to say that one should perform with fingers raised high.

3)Many players do wrongly clamp the keys down harder and they may do this more when they play more forte. Doing this is an psychological/emotional response and has very little bearing on the aural results. ..unless you want the audience to hear key slaps. So, don't clamp down. It's hard to unclamp the fingers for the next change after the longer notes. The same is true for piano playing. Closing the keys too lightly in pianissimo passages may be bad for the tone.

4)Having the fingers resting on the keys is a fun past time but also not very productive as it doesn't necessarily lead to a clear finger technique because of mass/inertia factors. Imagine that even when playing adagio lengthy notes, that the fingers should move quickly when changing any fingering. Resting the fingers against the keys all the time doesn't necessarily increase finger speed. The other issue is that many players who use open holes need to examine why the holes even exist if they are going to block the emission of sound vibrations with their fingers all the time. This leaves us with the purposes of open hole flute keys as being only for slide effects and alternate fingerings.

5)As one increases the tempo of their daily scales and arpeggios they will usually naturally keep the fingers at a proper attitude...if they are attentive to the details. :-)

~bilbo
N.E. Ohio

I found the same with violin, cello, guitars etc ............I pressed down real hard on the strings for years only to find out by accident later that I could achieve the same results by lightly pressing the strings!