I have shot underwater before, I've never owned my own camera for it though. When I got certified for scuba I rented a camera setup and took my own photographs on that same vacation.
I wish I could remember what camera it was, it was a Canon DSLR but as for the model I couldnt tell you. This was like 6 or 7 years ago, I believe it was an Ikelite housing as well. It was a pretty sweet setup, I rented it for a week for about $250 which was a lot better than spending $3000 on it, since where I live I'd never need it again.
Going to a higher focal length underwater isnt just for taking a picture of a far off creature that your strobes cant light up. I zoomed underwater, not to see further, but to get closer to an already somewhat close subject. The dual flash setup I had handled it just fine, I seem to recall that they actually have little motors that adjusted the beam depending on what focal length you were at. I specifically remember taking pictures of the reef wall at really wide angle and then also being zoomed in on tiny fish or at least normal sized fish that I wanted to fill the entire frame.
As far as everything being shot totally manually, at the time I didn't know anything about photography and I left it all on auto and it came out very well. I dont know if the flashes were just going full blast every time, I dont believe so though. I believe the only thing that was set was a shutter speed, I think the camera was just set to 1/250th or something like that and everything else compensated for it.
Anyway, I know what you're saying about the sharks being close up. I just got back from Hawaii a month ago and did some more underwater photography and had some fish coming real close to the camera and wished I could get farther away from them, but they can swim faster than I can