One of the most miserable thing about leaks is figuring out where they start at. It's never a straight line and it's never where you expect it to be. Saying that, I've never actually had to do what you are dealing with. My expereince is with water lines and roofs, so everything I say is based on theory and what I've been told.
The sheepsfoot is for open areas when building up soil in lifts. For a patch/repair job, I don't think it's going to accomplish anything.
There is a special attachment for backhoes and excavators that is similar to a sheepsfoot that's used in trenches, but it's expensive and not what I'd recomend.
Since you have the backhoe, I'd dig out a fairly large hole where the bulge is. Dig out the bulgs and several feet around it. Then dig back to the pond, through the dam. In this situation, I'd think digging more would be better then digging what you think is enough. The water is probably coming in from multiple locations and not just one area. You'll also have to adjust your digging according to what you discover whild digging. You might find an obvious issue like a log that was burried in the dam, or an area of gravel or sand that isn't sealing.
After you have it dug and have inspected the trench closely, start putting dirt back in. To compact it, rent a Jumping Jack or a Thumper type compactor. If you are not familiar with those terms, it's sort of like a jack hammer, except it has a flat plate that bounces on the ground. It's very effective in trenches and small areas. Rental fees are not too bad, but I don't remember exact numbers. Don't try to compact to much dirt at a time as the thinner the layers, the better job it will do.
Eddie