Yes, when the forage base gets depleted enough, the muskies as well as other gamefish will look for other food sources including smaller muskies. Sounds like a situation where there may be a combination of things going on including over harvesting of desirable "eating" gamefish ie: Walleye and Pike, a natural or man made decline in the forage base, overstocking ect.. I can sure think of many worse situations, If it were a Lake by me I would most certainly target Muskies 100% of my time on that water and still practice C&R. The truth be known is that Muskies get a bad rap for depleting other gamefish when the fact is Walleye, Pike and even Bass eat Gamefish as well (smaller size but in greater numbers). Most of the time when a lake shows a depletion of gamefish overharvesting or some other man made or natural problem is the culprit, not the Muskie population. Would sure love to make a trip up and fish that lake sometime, but definately wont eat any Muskies. You can also present the issue with your Div of fish and game, here in NJ I only notice the Pickerel population taking a hit where Muskies are stocked. Muskies dont eat them all (maybe some) they compete for the same habitats and lose after a number of years.
Good Fishing.
Norm