I tipped in pesos all the time and at the pool they are somewhat water proof (huge bonus). Its much better than having dollars in your trunks. Don't exchange dollars for pesos at the hotel their exchange rate was different than what the true exchange rate is. It came out to a difference of 18 cents per dollar. We would cross the street and exchange a couple hundred at a time.
Not to rehash something that was posted in another thread but it's actually better for the staff if you can tip with pesos instead of dollars. Otherwise the staff has to go and convert the dollars back to pesos so they can pay their bills, etc. We haven't in the past but next trip in September we're going to order pesos ahead of time from our bank here...let us take the hit on the exchange instead of the staff. Just my 2 cents...
Better to take a little extra than to come up short. We needed to get more, and made the mistake of using the ATM machine once at TTR in mid-June. Now our ATM card info is somehow compromised, and we lost everything in our bank account. Had to cancel the card today, and start the long, tedious process of submitting fraud reports. Not pleasant. Bottom line: Don't use the ATM at the resort. Best to bring extra cash, even if you don't think you need it.