This isn't your typical "high density living" though. You need to transport food and water out to the ship, and you would need to transport trash and human waste back to the mainland to be processed. In the process, you will burn an ton of fuel. This thing would also need some pretty substantial power generating facility to handle a boat full of computers, so they would probably be running the cruise ship engines 24/7 to generate the power, which is also terrible for the environment.
You can run multiple sizes of engine/generator to produce power and propulsion. You have big engines for moving the ship, which are usually off, and a smaller power generating system which powers maybe 150% of the normal electrical load, plus small thrusters for staying in position.
Diesel is expensive -- that alone will cause them to be fuel efficient and thus relatively environmentally friendly.
Right, but this is purpose speced for long-term stationary operation. FPSOs and other ships like that DO operate in that manner. Naval ships do, too. The reason other ships don't is that they're in relatively constant motion, and even those are switching to use shore power and aux power, since they have switched to more expensive fuel (diesel vs. bunker), fuel has gone up in price (what, 3x?), and environmental regulations apply.
Big marine engines are crazy (like 100k horsepower?), but that's not what you would use for this purpose.
As far as I know, they are always running. Even for the large shipping vessels. There was an article in Popular Science recently about how they are trying to come up with some sort of way for these ships to plug into the mainland for power while they are at port.