In general the more confined the space is the better, for the first few weeks anyways. The amount of separation depends on the amount of cuttles you plan to raise. I have 18 cuttles in two small holding tanks and they appear to be doing well so far. I like the shallow tank idea the best since that would give me clear viewing access, since my eyesight is real poor in my old age. :squigglemouth:
Whatever the setup you decide on, my experience is that it should not be cluttered with any decorative items such as sand, live rock, etc. I started out having just a small clump of chaeto but even this was removed because the cuttles especially when they were younger would just nestle within the chaeto and did not feed well. I surmised that it was because they were not able to view the terrain well and missed many opportunities for feeding strikes. Remember, adequate feeding in the first several weeks is extremely crucial for the viability of the baby cuttles. I wouldn't want to add any other factors that would limit their food intake at each feeding session.
Also, I would not be concern about swimming space since they typically do not swim much at all; instead they prefer to gather on top of each other in a clump. Curiously, they move about by walking on the bottom with their two front tentacles. When they are off the bottom they tend to be floating in one location surveying the area below them for any potential prey target.
