This type of area is not unique. Sydney Harbour and Parramatta river (Aus) is basically the same. Although no fixed wing allowed west of the bridge as the river is pretty narrow and defines the horizontal limits. It passes under the ILS for Sydney and the sky goes black when you pass under a 747. Worst days are when the weekend warriors are about.
Separation was tried and it doesn't work either. Self separation when things are busy is a struggle as well. One guy used to manage to hog the airtime and successfully separate himself from 10 other guys, but that was all. (RIP JB)
There was a method that worked pretty well in cattle mustering and was/is used effectively. Once the traffic is announced (i.e. you need to know it is there and indentify it) it is your problem if you are in the other guys blind spot! Think about that before you comment. It works. Granted it may not have any bearing on this circumstance.
Midairs between helicopter and fixed wing have happened before. Possibly not as rare an occurrence as some may think.
1993 Auckland mid-air collision
1992 Fox Glacier mid-air collision