OK today, when I was leaving the park at 7:00 PM (Saturday) I walked by Shrek and saw two lines, the regular line and the FOTL queue for hotel guests. The regular line, even at closing was the length of the building, and there were 6 people in the hotel FOTL queue. So it is there and being used. All I can think of is that sometimes attractions use "rescues." These are like substitute teachers in the public schools. My son, who works at the Mummy, has been a rescue before at both MIB and Shrek.
Maybe the rescues didn't know. Surely the regular workers know that onsite Hotel guests get FOTL at Shrek.
My suggestion: if you are staying onsite and the greeter out front tells you they don't have FOTL, is to ask to speak to a "Lead."