Is the saying in the Tashahhud: "Peace be upon the Prophet and the mercy of Allah and His blessings" after the death of the Prophet, may Allah bless him and grant him peace, correct, and should it be said in the Tashahhud?

The prescribed wording is to say: "Peace be upon you, O Prophet, and the mercy of Allah and His blessings," as the Prophet (peace be upon him) taught his Companions. This is because it is a supplication for him, not a supplication to him. As for whoever says: "Peace be upon the Prophet and the mercy of Allah and His blessings," there is no harm in it, but the first wording is better.