You are correct. You have to target a tree in the distance and the bug has to fly between you and the tree when you shoot. Tedious but it does work. Thank you!
As of 12/23/2021 Swarm Defense is working again.
It’s been bugged for a while. The workaround (until they fix it) is to use the dragon on the far left, and then turn around and face the big tree behind you, and you’ll be able to shoot the targets and complete the quest.