When talking "live rock", it's normally assumed that it's originally from an ocean. I don't know of any commercial outfit selling "live rock" that's been taken from the ground. You are correct though... the "live" reference is just the bacteria.
There is no difference between "base rock" and "live rock" except that base rock is "live rock" that isn't "live" anymore, and is normally sold bone dry.
I think folks are missing the point of the Craig's list dude - I think it's just a rant that he thinks real "live rock" is just a scam and you might as well just use rocks out of your garden. Either that, or the guy got scammed on some supposed "live rock". Personally, I'd never even consider it. Too much risk of contamination from who knows what.