I would guess that they would probably use it in a fuel cell to generate electricity. It is, after all, the perfect fuel for such cells. Just making the wastewater plant "energy self supporting" would be a major plus in the budget of pretty much any city of size. If the overall process turns out not to produce "sludge" or even reduces the amount of same that has to be disposed of as solid waste would be another significant plus.
I think the correct way to look at this is as a way to make wastewater treatment much more efficient/less costly, not as a major energy producer.
Yep, you nailed on several important points. First, solids are going to be produced and disposed of as with current technology. Wouldn’t surprise me if if this used an old fashioned stabilization pond type bioreactor, which takes a lot of area and very likely to require tertiary treatment that would tilt the economics the wrong direction.