Well does the bait work like mining gloves and let you fish beyond your skill. Doing the quest a bunch and the bait piling up. Should it be used before smelling up the house? Maybe there are hotspots where the RNG doesn't look as hard on how high your skill is. And like real fishing players will have there secret spots to go fish rares. And we know it is not broke. Never happens but does sound fishy, catching to many rares at GM.
I havent used bait yet, but I read you apply it to fishing rod. I assume it boosts chance, somehow ... maybe a 15% chance increase or something.
As for combining baits, that has been answered before me, hehe ;P.
From what I'm reading, people have gotten Fire Fish and the one I got and a few others per Mapper. So I'd say if you have bait, and want fishing buffs, use the bait in those areas ... or now that it is known they spawn, perhaps sell them. Not sure

... have to do so many quests just to be able to get a fishing PS ...