Is the prayer valid behind an imam who does not recite properly, such as one who recites "allatheena an'amta 'alayhim" (the ones on whom You have bestowed favor) with a "zay" instead of a "dhal," and is the reward for congregational prayer lost in this case?

The prayer of a follower is not valid behind someone who makes a clear, significant error (laḥn jalī) in reciting Al-Fatiḥah, because this invalidates the Imam's prayer according to most scholars. However, some have eased this ruling regarding letters with close points of articulation, such as (ḍād and ẓāʾ, sīn and ṣād, dhāl and zāy), due to the widespread nature of this issue, especially among common people.

Therefore, if your prayer mentioned with this Imam was valid, there is no harm in acting upon this opinion out of necessity, and it is not considered blameworthy leniency. Nevertheless, repeating the prayer as a precaution and to avoid scholarly disagreement is better.

This person should be advised gently, and what scholars have mentioned regarding the invalidity of prayer with such an error in recitation should be explained to him.