Even in the hypothetical, don't you think someone would have identified the "bug" by now? It would need to draw power while the phone is off, that would be measurable. It would need software on the phone. Even without the source code, the bug could be found in the OS or firmware. Do you think the FBI is working with ever phone manufacturer to install this and no one ever leaked that info? There isn't one piece of evidence that it is actually true.
That said, i would only trust my cell phone to be off if I took out the battery.
This is a case where you need to let common sense override your trust in journalists. You are probably smarter than them, you know more about tech and phones than them, don't trust them when they write stuff that doesn't make sense. Even if it were true don't you think some hacker woud have verified it by now? Offered a hack to stop it? They haven't because the article is dumb and wrong, and CNet should retract it. I'll cite the source cnet lazily misinterpreted if you give me a minute.
Note that it is VERY clear that the government is asking to install a physical bug into a phone that works when the phone is off. It has nothign to do with the inherent hardware of the phone.
http://ny.findacase.com/research/wfrmDocViewer.aspx/xq/fac.2...
Judge Jones granted the application, authorizing continued interception at the four restaurants and the installation of a listening device in Ardito's cellular telephone. The device functioned whether the phone was powered on or off, intercepting conversations within its range wherever it happened to be.