Not every captive Water Dragon is kept in poor enough conditions to give it a bad nose, but yes, it does seem that they're starting to breed in the moat. I haven't seen any near the Eagle Bar.
I can't understand why people say that something like a Water Dragon won't cause much change! Everything lives at the expense of something else. A Water Dragon needs to eat (anything it eats can't be eaten by anything else and anything it eats will die) and it defends a territory (it excludes other creatures from that area) ecologically speaking, these are not trivial things by any stretch of the imagination. The moat is hardly a natural ecosystem of massive conservation concern, so we don't need to frantically worry about the Water Dragons' effects there. No doubt they'll soon be in the wildlife reserve if they aren't already, and arguably that will be a big problem. As well as the extra food they might eat (they'll be taking frogs out of the wildlife reserve which will likely result in them becoming rare, compared to extremely common at the moment - but since those frogs are not local, that's not much of a problem either!), they might start eating things which usually go untouched - they can swim across the moat to the islands where birds breed in the absence of foxes and cats, where they may eat eggs and nestling water birds, just the first possibility to jump into my head.
To some extent, the Water Dragons will take over the niche currently occupied by Blue-tongued Lizards in the wildlife reserve, which will certainly have an affect on their population, perhaps neglibible, perhaps large. It is very speculative, but possibly the presence of Water Dragons could make the planned introduction of Dunnarts into the wildlife reserve impossible (to be honest, I don't think it would/will work anyway!).
If they are to become widely established along the Yarra (which seems entirely possible), it is entirely possible that they will cause significant problems.
The non local turtles in the moat are Emydura macquarii, there are squillions of them in there. On a day like today at this time of year (and at this time of day) you can sit by the moat just down from the Eagle Bar and you should be able to spot between about five and twenty within a minute. You might also see two or three Long-necked Turtles, but they seem to prefer the area near where you saw the dragon (or perhaps it is more a case of them having competition from the Short-Neckeds, which prefer the lower moat).
Some of the herps may be out of place, but it's a very cool campus! I miss studying and working there!
