No one asked my opinion, but here goes ...
Ostensibly, the treatment plant (and nuclear station, for that matter) are near the water because of a need to discharge or exchange a high volume of water into the harbor. Putting the plant in the natural path from high ground to the harbor makes the most sense operationally. Pumping stations are not cheap.
To gain elevation, a plant on Federal Street would necessarily need to be up where the actual school building sits, not down on the ballfield. I agree that would be a tough sell for the residents, not to mention the need to move the school as James already mentioned, and that ship has effectively sailed.
Mason Station would seem to be the better choice; at least there you have a chance of bringing in fill to adjust the elevation, and it's a pleasant distance away from downtown. There's even a rail spur directly onto the point that could be reactivated and used for construction.