Micheal,
the reason the foam breaks down is because people are leaving it exposed to their lighting. It is very UV sensitive and will break down under MH lights over time.
The 'pond foam' version of great stuff costs a bit more, but it has carbon mixed into it. This makes it dark grey and also offers UV protection. not sure if there is anything else different, but the DOW Chemical company claims it to be fish-safe whereas they say regular greatstuff is NOT fish safe.
I think the using epoxy over it is the best method. I'm pretty sure that carbon is the only thing added to the pondfoam, so if you used epoxy and then cover it in sand/crushed coral you're providing pretty good sunblock IMO. Not only that, it looks amazing like that.
I've seen a *few* people pull off the raw-foam look, but it usually ends up looking like squigly turds unless you spend alot of time moulding the shape by pressing rocks into it. Its actually alot harder than you think, I tried it.