J,
I find whities tend to hit indicators quite often, so if there wasn't other "consistantly" rising fish, you could have probably kept on nymphing (they like the pink & orange indicators, it seems)...
In regards to you foul hooking the Rainbow... How much tippet was between your flies? One of the reasons why fish get fouled with multiple nymph rigs is because there is not enough distance between the flies... Make sure you have at least 16" - 18" between your flies... He probably went for your first fly (or was hooked on your 1st fly) and spit the hook and then got tagged in the tail with your 2nd (or 3rd - if you were using a 3 nymph rig).
And when you set, set it like you mean it (if you ever see rickr on the water - you'll know who he is as his hook sets scare the $hit out of you!! LoL - Hawgstoppah taught him well!)! I too could use a harder hook set!! So yeah, set it like you are going to make a 60 foot cast behind you!!
Hope that helps!
Cheers,
Peter