Is it a really a mistake to underbluff when bad players tend to call down with any two cards they like?

I'm guessing the answer is they bluff in the wrong spots, but still

It is generally speaking not a mistake to underbluff vs calling stations. But we can still exploit underbluffing players by finding some tight folds.

It's never a mistake to play in a manner that reduces your losses. When you are playing with POWs (pay off wizards) you simply can't bluff very often, if at all. What you can do is vary your bet sizing to maximize your value from hand to hand since they more than likely don't pay attention to the bet sizing, only that you bet and they have a piece of the Board. This practice can actually help you bluff against other Players at the table that are paying attention to your bets sizes and are turning over winners at Showdown more often with larger bets, so to speak.

Not sure who 'they' are in your 2nd comment, but bluffing requires that your betting tells the right story for how the hand played out. If the story doesn't make sense, then it's not going to work. As with the case of POWs, they don't 'see' your story as often as other since they are playing 'cards' and not 'poker' most of the time. GL

Something to consider is that it's entirely possible for a player to be so wide on previous streets that they end up both folding too often and call with too weak of a range.

Or, people may call too often on one street, but then overfold another street.

There are lot of things to consider.

Your title really is not expressing a contradiction. Bluffing is an aggressive action. Calling is a passive action. You can both bluff too little and call too much. It just means that such players will almost never take any aggressive action without good cards, but will not hold to your aggression when they have marginal holdings. The best adjustment is to underbluff yourself; they will fold too little to make your bluffs profitable, but value bet more thinly than normal. They will often call with lesser hands that a good player would fold.

There's no conflict here.

Just stop bluffing, bet thin value, and overfold to aggression. Simple ABC strategy.