1. The lower lake still needs to be substantially above sea level and the local water table etc. so that it can actually be drained and so that it doesn't just fill up with local water. You can't do this by the hoover dam, since you'd also have to lower the river another few dozen meters. That's more challenging than it sounds, since you'd have to continue digging all along its path until you reached the place that the river naturally fell to that lower altitude.

2. Reservoirs are very large. The lower reservoir in this article is 7 million cubic meters[1]. The Hoover dam passes 289 million cubic meters of water daily, with around 78.3 million cubic meters of that generating electricity. The largest land vehicle in the world can excavate 700k cubic meters per day[2].

[1]: https://coflein.gov.uk/en/site/423380 [2]: https://en.wikipedia.org/wiki/Overburden_Conveyor_Bridge_F60

3. We do dig them out- the reservoir in the article was substantially enlarged. But it's still rare to find places you can actually do that.

4. The upper reservoir is a totally different question. It would take over 125 years to dig out a hole the size of Lake Mead for the Hoover Dam. It would take almost a million of the bombs used the Sedan nuclear test[3] to dig that hole.

[3]: https://en.wikipedia.org/wiki/Sedan_(nuclear_test)