It is difficult for me as well. The idea is that it is shooting in "3D" like a real On Rails Shooter, but since there is no scaling and no real 3D, it is difficult to see. I also thought about coloring the sprites to represent the depth, but then I realized that couldn't be done on the Intellivision.
As far as shooting the enemies goes, I would only go for shooting enemy ships when you are in a good position to shoot and get away. Shooting asteroids is less dangerous. I usually get up close because it is easiest to hit them when they are on the final level of depth and are right in front of you. I got the mass majority of my points by using bombs once a large number of enemies appeared.