> What will turning the red eye on the camera itself and leaving it on all> the time do?
Red eye reduction mode fires the Speedlight a few times before the shutter opens causing the subjects pupils to close and reduces the chance of red-eye. It also causes a delay between pressing the shutter release button and the shutter opening. Red eye reduction is more effective when using a normal lens at distances up to about 10 feet or so. When the ambient light level is very low like in your sample image. Add to that the 250mm focal length and the flash to subject distance your SB-400 Speedlight didn't have enough power for a correct exposure so red eye reduction mode would not help. For it to be effective, you would have to be shooting at about 50mm or wider and be at or close to the front row. If you had significantly more flash power bouncing the flash off of the ceiling would be significantly more effective then red eye reduction mode.
The bottom line when using on camera direct flash with a telephoto lens red eye will be a major problem even if Red eye reduction mode is on. Good Luck and Enjoy your Nikons!