8 baby reds will be fine in a 55g for a while, but eventually you'll need to upgrade (at least 120 gallons, imo). The moment when you have to upgrade depends on how ell your reds will get along, with it would be necessary within 8 months, but probaly a lot earlier.
I don't know what kind of catfish you have, but some species do pretty good with piranha's (like pleco's and raphael cats). I suggest to get rid of the oscar, though. And if you get small reds, also remove the 2 larger ones you already have.
As for the tank set-up: just aquascape it the way you like it, as long as you provide a couple of hiding places. And it's always better to get live plants (since they contribute to your tank's health, unlike fake ones...). Air bubbles are not necessary, but some piranha's actually enjoy floating in the bubble curtain. It also breaks the water surface, which results in extra gas exchange (CO2 in the water replaced by oxygen), but an internal filter or powerhead which creates surface agitation does the same trick.
I hope this helps :smile: