I don’t know if it’s that nutty! “Let’s study the most dangerous pathogens” sounds like a good idea to me. So the nutty part would be doing it in a city, but would that actually make a huge difference compared to a remote lab? If it got out of a remote lab, one can imagine it would ultimately end up spreading quite far exponentially, even if it would take slightly longer to reach a metropolis.

Seems to me the main thing would be ensuring foolproof protection from anything escaping at the lab — which obviously was lacking if the theory is true. So the idea seems fine to me.