Hood Canal is a fjord. Fjords are naturally hypoxic(low oxygen levels). If you were to look at it from a side view, you'd be looking at a deep-dish plate. The entrance is indeed narrow as well as "shallow". In a typical fjord, there is a sill on the sea floor at the entrance.

Since we're now in the summer time, very little freshwater flows into the Canal. As a result, there is less oxygen available. I don't recall that there have been particularly high winds in that region lately. Wind or lack of wind affects dissolved oxygen levels throughout the water column.

Additionally, since there is little to no current down on the bottom of Hood Canal, oxygen is not abundant.

Also, summer is the time when all fish are growing, especially juveniles. As a result, the high number of fish(in comparison to winter time) means that the available oxygen is rapidly depleted.

I have not fished Hood Canal at all so I cannot say anything about the current and direction of water flow. But I would suspect that tidal flushing only affects the upper layer of water.

To my knowledge, the vast majority of Hood Canal's west side is developed in some way. Bulkheads and seawalls protect waterfront homes while increasing the erosive power of the waves. Riprap by the highway's edge also alters habitat. McDonald's Cove is altered by the jetty that creates a mini-harbor for the commercial fishing boat moored there. The few undeveloped areas are the estuaries of the major rivers.

Because so much shoreline has been lost, most of what is left are cobble strewn, oyster laden rocky beaches with very sparse spawning gravel for forage fish. Accordingly, forage fish populations have decreased in this particular region.

Sadly, new houses are still being contructed on the shores of Hood Canal. It would seem that waterfront homes are more important than enforcement of the shoreline protection act.