I wanted to circle back and update those that are interested.
In preparation for this experiment I added a 5 inch sand bed to a quarter of my 34 gallon mixed reef in late August. In early September I bought 3 garden eels and added them to the tank. When you add garden eels they want to drill into the sand and hide immediately, so I placed them in the area I had prepared for them and temporarily used a flat piece of plastic to keep them in that area. Within about 5 minutes all 3 garden eels burrowed into the prepared area and I could remove the plastic.
Two of the three garden eels started eating immediately (mysis, fish eggs) and I saw them quite a bit. The third never ate, never came out, and was lost within 48 hours. I had read this happens as they don't travel well, so I had bought 3 with the goal of having at least two survive. So ... as expected.
The two that survived did great for about two months. I fed heavily 3 times per day (mysis, fish eggs, hatched brine, white worms) - they ate robustly and spent a lot of time out as pictured above. To feed them I would turn off my return pump and leave my MP10 so the food staying in suspension and drifted by them.
One issue I was noticing is that my pistol shrimp was burrowing under the deep sand area and causing minor cave ins. I would just go in and move the sand back and that seemed to be ok. One day, one of the garden eels didn't come up and was never seen again. This was the dominant garden eel that ate the most and bullied the other a bit, so I was really surprised to loose this one first. The second one is still alive and has been on his own for the last month. He moved around the tank a few times trying to find his happy place. I only see him once ever few days, so I don't think he is happy. He has been camped out in the same place for about 2 weeks now - it is not a great location for feeding/viewing, but it is one of the few areas where the pistol shrimp does not dig. I am not optimistic that this guys is going to live too much longer as he does not feed robustly.
I don't plan to get anymore of these guys as they are too fragile. I also think it is a bad idea to add them to a tank that has a pistol shrimp or some other fairly aggressive burrowing creature. I truly hate my pistol shrimp and wish I had never added him to the tank - beyond burying corals I suspect it is also responsible for a number of fish disappearing. I didn't think of it before hand, but have since read that other people came to the same conclusion that garden eels and pistol shrimp don't mix well.
If anyone else is thinking about getting these I would recommend thinking about it deeply. Even with 3 feedings per day I suspect they need more. Keeping a deep sand bed in just a portion of the tank is tough and not very pretty to look at. Choice of tank mates is important - there is a debate about whether or not they need a species-specific tank. I have heard of people having success using different styles of tanks, but most people seem to agree they are a lot of work.