Nice report and nice barracuda! Squid does not age well. Even fresh squid, after it has been in the water for 10 or 15 minutes gets hit a lot less. I don't find squid, in general to be that popular of a bait in the upper parts of the water. Also the piece of squid you are using looks very big. I often find the big baits are ignored until a bigger fish comes by that can conceivably eat the whole thing. As far as shrimp goes, I have a lot of success with head on shrimp that I buy unfrozen at the market. The shrimp head rots quickly so I find the head on shrimp to be the freshest. Once they take the head off, they can rewash it, thaw and refreeze it, all of which takes away from the smell and appeal of the bait.
Anyways, love the camera and the way you are using it to research. Would love to be able to get it down to the bottom but I understand the limitations of your setup. A friend of mine had an untethered camera but tragically lost it to a snag.
I agree that there are a greater volume of fish towards the top but the more interesting fish (to me at least) are down on the bottom. I would be curious if that sheephead would have struck the bait had it been lower.