I'm familiar with the sluice-way on the Omeme end of the creek to Badwater you speak of. 
I believe Club is referring to the dam that was located on the Bearpelt lake end of the creek that washed out (in 2002?) and caused the lake level to dramatically drop 8-10 feet in the matter of just a few hours.  The beavers had built a dam on top of the old loggers dam and the water level had risen several feet over the years as a result until the dam could not take the pressure during a flash flood that year and washed out.

I have not made it back that way since then myself, but fished Bearpelt lake the week before the dam let loose.  Lots of great memories on that remote lake.   I would love to go back, but it would take much more effort than before.