The interest rates on munis tend to be lower than other bonds because they are both federal and (home) state tax exempt. It's simple enough to avoid investing in tax exempt bonds. And unless your income is EXTREMELY high, you probably shouldn't be buying those anyway.
The main other problem an acceleration of municipal bankruptcies might have on FIRE is if a state/city pension is a big part of your post-FIRE cashflow. Really no way to mitigate that one.
Now if you buy into the broader idea that it's not financially viable to maintain the infrastructure of suburban single family homes, you can expect some degree of densification, which would increase the property values and rents of houses and apartment buildings near city centers and reduce it for houses at the edge of urban areas. Since the first type of property is much more likely to be a rental and the second type more likely to be owner occupied, this also shouldn't be a major program for most MMMers who are planning to retire through real estate, although it's worth being conscious of as one possible outcome.
If you're going to conventional path of saving up money in equity index funds and then living off of 4%, I don't see any problems at all.
