Requirement 1 should definately be:
1) Show that you know first aid for injuries or illnesses that could occur while hammocking, including minor cuts and abrasions, bruises, hypothermia, frostbite, insect stings, tick bites, snakebite, altitude sickness, and CBS.
Additionally, some requirements should focus on the use of rope, knots and splices specific to hammocking: (Nowhere in BSA is there any exposure to single or double braid splicing, and I think this is a gross oversight!)
2) Tie the following: square knot, Prussick knot, marlinspike hitch, garda hitch. Demonstrate the proper use of a figure 9.
3) Explain the uses for the continuous loop, eye and whoopie loop. Using 7/64" or 1/8" Amsteel, demonstrate how to form each splice.
Certainly there should be an "experience" component:
4) Show experience in hammocking by hammocking a total of at least 5 nights. Sleep each night (with or without a tarp) in a hammock you have hung. The 5 nights must be at a designated Scouting activity or event. You may use a week of long-term camp toward this requirement if you forego the pre-pitched tent and cot for a hammock you have pitched.
Now that's more in the spirit of merit badge requirements!