Uhm.. and maybe don't feed the eel with your hand? You just asking for trouble, not matter what size the eel is. They pack a NASTY bite. Whether he does it by mistake, or on purpose because you were invading his space, i hardly think it matters. You need to use prongs to feed him or something that is safe to go in the aquarium and will keep you a good distance from his mouth.. full of sharp jagged teeth. Honestly, i would never try feeding an eel with my hand. The snowflake will also eat any and all crustaceans in your tank, so that pretty much puts a nice limit on the things you can have in your tank.
Also, i'm willing to put money on the fact that your damsel will be gone before you can upgrade them both to a larger tank. Especially in such a small tank, i'm sure he'll find the damsel to be a nice snack. Eels don't exactly have the greatest of eyesight and i've read many stories about eels eating the smaller tankmates by mistaking them for food. It's not very common for them to eat fish, but it has happened before, and keeping it in a 10G tank with another fish won't help any. Just thought you should know if you have any emotional bonds with that blue damsel lol. Also, i really think you should have just waited UNTIL you upgraded your tank before you got the eel. What's the rush?
And as Etunes said, definitely keep that tank covered or it will enevtually find its way out.