!! I surf fish, but have not spent much time on jetties. I have fished the Manasquan Inlet both sides and the south side of the BI a few times, years ago. My guess, and only a guess is the guys all huddled up are out there so they can fish the ocean or the pocket on the beach side, or just an area that they feel has decent structure that will hold fish. I don't fish in crowds, so I would do exactly what you did and move to another place. On the north side of MI, there are always about 10 guys fishing the pocket from the jetty and it is a productive spot. The ends of both sides of the MI are popular too because they all think they need to fish farther out and in the ocean. Truth is, yes some fish will hold in spot where bait is, such as the pockets, usually on the north sides, but both sides can hold fish and anywhere there is decent structure. However, it is not always a given that these areas will have bait or fish there and if a school moves in your chances are just as good anywhere the school is moving through. Inlets are not the easiest or most productive places to fish and limit you on where you can move. I'm not saying not to fish them, but hitting up the surf from the beach and learning to read the sand and water will give you just as many opportunities. OF COURSE, fish where ever and whenever you can...there is never a bad time to fish!!
As for eeling, a bass is going to inhale that eel, quickly! By the time you feel the hit and they start taking line, they have already inhaled that eel. I would only give it about 5-10 seconds before setting the hook (on a non-circle hook) or engaging the reel and reeling in (with a circle hook). On non-circle hooks, like a j-hook or bait holder, I would set the hook no more than 5 seconds to prevent gut-hooking. If you are not getting the hook-ups with the circle hooks, I would check to make sure you are rigging the eels properly or switch to a J-hook. I have read pros and cons on circle hooks and eels. They are great for preventing gut-hooking, but they also can get double hooked in the eel and prevent you from catching the fish!
Good luck and hopefully, someone who jetty fishes regularly can give you some up-to-date insight!
