Yes, this is/was the outdoor pool for the Nile hippos. The hippo house was pulled down several years ago. After Peaches was sent to NC; I think they had a Crocodile in there for a short time. Prior to this, a hippo was kept in the old elephant house in the main valley across from the polar bear pool.
This is actually a rather large exhibit and nice and it's really a shame that nothing has inhabited it for quite some time.
As far as the possible relocation of the penguins, I'm not a big fan because they currently have a very large exhibit, which while is not that aesthetically pleasing, seems to be very suitable for the animals. Plus, the former hippo exhibit can very nicely hold pygmy hippos and possibly other species in a mixed exhibit.
According to the lighting master plan, it looks like the new penguin exhibit will be in front of the Arctic area(which makes no sense species wise, though I'm guessing it'll be built into the hill to make the underwater viewing easier). Check out the plans... Oh and if you notice, there may be another prairie dog exhibit in the works--over kill in my opinion. http://www.gilmorelight.com/pdf/maryland-zoo.pdf
I would love to see Pygmy hippos in this space. Putting penguins in this exhibit may be an exciting way to start in this exhibit, but I would hate for it to take away attention from the beautiful sitatunga exhibit across from it.