12/3 cable coming from box, is this correct?
Red is carrying switched-hot off to another location where a light might have been fed from.  It's not going straight back to the panel.  If you follow it you'll probably come to a good place to fork off more light fixtures.
Red is the preferred color for switched-hot.
Now there are a few issues with this box. It's extremely over-full.  You have 11 wires in there + ground + cable clamps, so I see 13 wire counts... at #12 that's 29.25 cubic inches required for that box.  Those octagon boxes are about half that, so you'll need to get an octagon &quot;extension box&quot; to put on top of this box.  Or you could change the box to a 4-11/16&quot; square box (42 cubic inches).
As far as the aluminum to copper splices, purple wire-nuts may be Code but they sure like to start fires. You'd be wise to consider Alumiconns for up to 3 wire connections, and MAC Block connectors for 4+ wires.  The MAC Block has 2 voids and allows up to 4 wires per void (though the 4 must be the same metal).