Boat driver

[Serapy]

The sky was red-ish, so you should see some red on the reflection

The sky was not 'red-ish' when the boats passed over the moon's reflection. The sky was reddish later when the boats came up to Dollet, which was the morning after.
Even then, none of that explains why this would 'reduce' the reflection, as you said.

The sky changes that fast??

I don't think Squall's conscience is supposed to express green-ish. More like, black, brown, silver or grey.

Which has ANYTHING to do with green looking suitably ominous... HOW?

Really, I don't think Green is an ominous colour. Players who played VIII also likely to have played VII.
In VII, they look at Lifestream - oh, that's a good thing!
In VIII, they look at this thing with the same colour - oh, green.

Definitely not ominous!