Hi Ron,
Suppose you fix what you consider the fundamental field variables in your theory, for example the metric and your 2-form L_{ab} . Moving indices means that there is implicit dependence of the metric or inverse metric, in this case
L^{ab} = invg^{ac} invg^{bd} L_{cd} .
When we vary the action, we need to vary it completely with respect to all the fundamental fields. So, while the variation of the covariant L_{ab} is just \delta L_{ab}, the variation of the contravariant L^{ab} now also includes dependence on the variation of the inverse metric,
\delta(L^{ab}) = ... = \delta(invg^{ac}) invg^{bd} L_{cd} + invg^{ac} \delta(invg^{bd}) L_{cd} + invg^{ac} invg^{bd} \delta L_{cd} .
As usual we can express the variation of the inverse metric in terms of the variation of the metric by hitting the identity invg^{ab} g_{bc} = \delta^a_c with a variation [e.g. Carroll's Eq. (4.56)].
The point is that if your fundamental variable is the covariant L_{ab}, then the term L_{ab}L^{ab} actually has dependence on two factors of the inverse metric. Meanwhile if your fundamental variable is the contravariant U^{ab}, then the term U_{ab}U^{ab} has dependendence on two factors of the metric, not the inverse metric. And the variation of the metric and its inverse are different.
As far as what is the "correct" choice to make when defining your theory... I think the only answer is it's up to you (I'm interested to hear anybody else's thoughts!). For your example, the vanishing of the trace of the stress tensor when using L_{ab} reflects the conformal invariance of that theory in d=4, whereas the theory defined in terms of U^{ab} is not conformally invariant in d=4. You can check with xTensor that the EOMs for L_{ab} have a homogeneous conformal transformation if L has conformal weight 0, whereas the EOMs for U^{ab} have a homogeneous conformal transformation when U has conformal weight -4.
Best
Leo