I believe his horror was real and honest. Let us all remember that Shep is from Holly Springs, Mississippi. He also went to college at Ole Miss. So, he is a local, in his own area, in and around where he grew up. I'm sure that this is more than a reporting gig to him. It is where he is from. That would effect all of us to some degree.
I could feel the genuine horror from Shep and I think it is because he comes from that area. He got some excellent quotes from people who were just coming out of the water. I thought he was able to give the audience more of a "You are there feel" than any of the reporters there are on the scene.
You are probably right. They should have realized that and put someone else to cover this story from ground zero.