Here is my own recollection until someone comes along with a more detailed version.
When the park first opened, boats would run between the two docks. The concept was that it would be more of an attraction than a means of transportation. Guests were supposed to see things from the boats that they couldn't see elsewhere.
In fact, there was a cave created along the waterway with a faux dragon that would spew fire periodically--I don't think you would even see the "dragon", just the fire coming from the cave. The "dragon" was supposed to be a tie-in to the Beastly Kingdom region of the park that was never built. And, I believe the fire-breakthing mechanism was tempermental, too.
Anyway, the boats proved to have little entertainment value and, due to their small capcaity, they had little value as a means of transportation. Lines would exceed 20 minutes (with folks thinking they were waiting for an entertainment experience) when the walk between the docks might take you all of 10 minutes.
All of this lead to very poor guest satisfaction reports. They closed down the boats within months of the park's 1998 opening. A few different approaches have been taken to the boats and docks, but I think it has been years since they have carried any passengers. Right now you will occasionally find the boats floating down the water with live musicians entertaining diners at Flame Tree BBQ (we saw them last month). The dock you saw has been used exclusively as a Pooh character greeting area for more than 2 years now.
