It can, but lemme just say steel yourself. From the very beginning one of my multiple "predict everything so I can later claim to be right" predictions is a lot of municipalities actually do settle shit like this.
And the frankly dumb decision to reject qualified immunity in this case put the pressure on even more. I think the immediate appeal option would have been the winning option for the city, but remember, Fatty Porklinson may be Milwaukee's only multiple swatting case, and they frankly did not do a good job dealing with it.
So settling it and establishing actual policies and training on how NOT to do what happened here may be their best choice financially.
I hope it doesn't happen, but don't be too surprised or disappointed if it does. Even if Fatty benefits, so does everyone in Wisconsin, because there should be sane policies in place that make swatting way more dangerous to the perp than the victim.
It's extremely common for settlement-related documents to be restricted or even sealed, since they can't be used as evidence in an actual trial. The policy purpose is to encourage candor between the parties, and more generally, to encourage parties to settle.
If you allowed settlement negotiations to be entered into actual evidence at trial, this would vastly discourage the candor and willingness to negotiate that essentially immunizing such communications allows.