I think turning a former dump into a park is actually a pretty good idea. Not much else you can do with the land, would you want to purchase a house if you knew it was built on-top of a former dump?
Housing over a former dump site is obviously a no-go for health reasons, but getting any structural engineer to sign off on any type of building constructed over a former dump would be difficult as organic material tends to settle and compress as it decomposes. Eventually as the ground sinks the floor slab will crack, walls will lean, and finally the building will collapse.
That said, buildings can be built on former dumps, it happens all the time. An example is the Home Depot on United Blvd in Coquitlam. I think the primary settlement usually occurs over about 20-30 yrs, after that time period the ground is much more stable.
As far as the methane, buildings can be built with methane collection systems under the slab, its basically the exact same as drain-tile, usually connects to a riser pipe somewhere in the middle of the building where it is vented up to the roof.