I'm not saying thats the reason it closed, its just one of the reasons why it wouldn't reopen as is.
The article states it better than I do.
When RC opened it was in the middle of the what was the "World" back then. You had the MK, the TTC, the Poly, the Contemporary, FW and I think the Golf Resort which is now SoG. Now its in a far, out of the way corner, of the "World".
I would add if you told people that there was a WP located near the campground at FW. They would probably reply "There's a campground at WDW?
" or "There's a Disney Campground Resort behind HDDR?". Even people planning on staying at FW ask if they get all the privileges that guests staying on site get.
The end of the article does address the water issue. My post didn't get into the specifics and yes I didn't
fully research the law but my point is still valid. If they did take the water from the lake it would have to go through some major treatment. The article then states that they would then have to seal it off from the lake and use a recirculating system but that would pretty much mean rebuilding everything aka bulldoze it down and start over.