If there was absolutely any possible way that students could be allowed to "camp" inside the Scheman, that would be the obvious best system available. Have security work in shifts so that someone is always there to make sure there isn't any trespassing and vandalizing going on. Have the designated line of campers run in a certain shape to keep things in order. When time comes to let the students into Hilton, have staffers there to be sure that the line remains orderly on the walk to Hilton.
Obviously this is NEVER going to happen for about a million reasons. But that's my dream scenario. A lottery system is terrible for those who actually care about the team and a merit system would be unfair to the younger students who still pour their heart and soul into the program. As it stands, camping will continue to happen (I personally love what it does from a publicity standpoint, and while I hate the blatant budging, that would happen anyway). I would guess that the university just takes steps to ban certain items, like heaters, in order to discourage such large numbers of students from camping.
Yes, this would never happen. Allowing students to camp inside Scheman would place greater responsibility on the university for the safety of students. Besides, I think Scheman often has other events going on. Sometimes the day of games, the day before games etc. Wedding receptions, conferences etc.