Many tip in US dollars. No one seems to complain. However, pesos in 20 and 50 denomination are waterproof, which makes them a little less soggy at the pool.
I can't say as I have always just used US dollars. No one has had issues with wet US dollars lol. I believe some simply go to their local bank branch and order pesos as opposed to converting in Mexico.
I asked staff at Desire years ago and they prefer USD. Yes, Pesos don't need conversion, but USD is smaller denominations and they can always convert at a bank. We're Canadian so USD is much easier to get in larger amounts of smaller bills than Pesos. Makes things much easier. And no messing around with terrible exchange rates in Mexico.