Hi Mathgeek,
I love shooting spud guns, what a blast! But spotty ignition and spud just rolling out of the tube are a pain in the behind. Check out
http://www.burntlatke.com/l3.html; these guys have spent some serious time working out the kinks, using metered propane, spark strips and oxygen/gas mixing in the chamber. 100% ignition every time with none of the frustration.
Next step, you should encase your chosen bait projectile in a suitable sabot material. The big question is, can you make a biodegradable sabot? I would guess something like the peanut material in packing containers that is water soluble, heck if you're really fancy, perhaps a shrimp flavor to further chum the area.
Lastly, attach a reel off of a bowfishing apparatus, mount to said spud gun, launch and attach to rod and reel.
Just remember to take loads of pictures when you get the completed project finished!