That scene would have been better if Dutch just looked at the mud without saying anything. Predator is supposed to have amazing hearing, he listened to the team's conversations from far away. He should have been able to hear Dutch say that since he wasn't all that far at all.
It would also make a better scene because we'd get to the conclusion on our own, without Dutch explaining what obviously happened.
If I were Dutch, I wouldn't jump to the conclusion the Predator couldn't see me because of the mud so I'm safe to walk around with mud on me. I'd probably assume he couldn't see me because I was well hidden between the roots. Dutch was just lucky he made the right conclusion out of insufficient information.