(...) That their plan is to just dump the bacteria in local mud and have it generate electricity.
What I tried to point out is that further consideration is needed on whether the environment needs to prepared/sterilized, i.e. made noncompetitive in ecological sense for the bacteria to do their job. It's not naive, it's biotechnology 101.
(...) pass the mud/waste water/etc through the fuel cell to produce electricity.
As it comes to wastewater, it may be good idea, technology for doing that already exists. Mud is dense so mass transport would be extremely energy consuming.
The bogosity meter just pegged.