If I'm not mistaken this is similiar to a type of fishing that we employ off a pier on a small lake in Wisconsin when we go up camping. I'm not sure the technical name (we call it tight line fishing appropriately). Basically, we set up our rods with a three way swivel with one end attached to the line, one end with about a foot of line leading to a heavy weight, and the other with about 18" of leader material and a hook. We use golden shiners and hook them through the tail. Basically we cast out at varying distances, let the rig fall to the bottom, then tighten up the line until the tip of the rod is bent slightly. The shiner swims around with in a 36" radius and looks as though it is struggling to get away. When you get a strike the rod tip bends heavily. (I have also heard of this called a wolf river rig - by Wisconsin people, they're a different breed though
). It's a great way to fish off a pier when you don't want to actually "work". If you're feeling extra lazy you can put bells on your rod tips, sit in a camp chair, and knock a few back without paying much attention at all. I'm not sure if this is exactly what these guys you were reffering to are doing but I assume it is something similiar. And I suppose you can use just about any kind of live bait, although I think a struggling bait fish looks a bit more attractive. Last time we were up there a guy was using a fly rod to catch small gills off the side of the pier and then would put those guys on and cast em out. Anytime he landed a fish or lost his bait he would pick up his fly rod and have another bait fish in a matter seconds.
Eat what you like and let your stomach fight it out on the inside.