The passive seems fine to me, I play bloodhound almost exclusively, and though I would like it if they were a little more like they are when you are ulting, I can live with how it is.
I do understand the difficulty in fighting with the ult on, but it is usually only activated in a fight. So its ability to see mostly only enemies is kind of the point.
However I do completely agree with the q, The after shadow often times hurts, more then it helps. I think a nice change, would be if it highlighted the enemies for an extremely short time, maybe 1.5 seconds, and that highlight fades over that time, starting out bright, gets really dim by 1 second, and out completely at 1.5.