Is it realistic to live in a motel (a la "The Florida Project")?

Actually, people with disastrously bad or no credit have few other options. They would live in a class of hotel/motel known as an "Extended Stay." Because residents commit to longer term rental periods, generally weekly or month-to month, they get a reduced rate which is usually comparable to an apartment. In most areas it can be as little as $40 a day. Orlando is actually a bad example as the high tourist demand pushes average rates significantly higher, in the $60 to $100 a day range.

Here is a low-end example of a $60 a night extended stay in the Orlando area that might have better rates for longer commitments: Choice Hotels Orlando >>

More information about Extended Stay or "Apartment Hotel" residences from Wikipedia. >>

From what I know in USA you may not only be denied mortgage due to your bad financial situation. You may also be denied renting a house or an apartment. So yes, you may be forced to pay more than you would pay renting an apartment or mortgage rate because bank or renter consider you untrusty or your income to low to afford the expense for a longer time.

So instead of committing to very long term of paying rates or long term rent you are forced to use very short term (weeks or months) for a higher price. The reasoning is that If you struggle to get your money here you don't commit to long term and rather go looking for work in other places.

The Magic Castle in Kissimmee is a real place, and their rates are real cheap for the Orlando area. Is it plausible that someone would choose to live in the hotel (if the management was willing)? Maybe, particularly if the location is struggling to attract tourists on a regular basis. When I worked at a resort hotel years ago, we used to have people stay for months at a time during the off-season.

That being said, in this area, particularly Kissimee, it would be cheaper to rent or buy a mobile home. I suspect that goes for many places in the US, but I've also seen old motels converted for use as apartments when the economy in the location tanks.

I cannot answer for United States, but this is a well known and documented situation in Paris and suburbs.
This is unrelated to covid and lockdown. Those situation existed way before Covid.

Of course, all the links I can provide will be in french. Sorry about it.
Youtube french video : she live in the hotel she works
French: she live in an hotel for 1700/month with her 3 children

This second example is particulary jarring. I lived 5 kilometers away from the hotel this woman was in. in a 100 m² appartement. For 'only' 1200/month. So yeah. those strugling families pay even more to have a roof. She earn 1250/month from social care. She had to borrow money from her family and of course going much more in debt.

In france, law in rental are all in favor of the rentee. If a rentee stop completely to pay. He can easily stay in the appartement for 2 more years without paying a cent. And despite going to justice, the renter is unlikely to ever see that money.
In the second exemple. The previous renter of the women is still due 7000 euros. he's unlikly to ever saw them.

That make renter very exigent when choosing a rentee. And basically if you don't have a long term job, it's a big no-no.

We have in france a system of social housing with low rent. But in paris, there is so many people wanting (or needing) to access it that the delays frequently go over 5 year.

So people have no choice here. They have to live in hotels. Either slum-hotels that prices are equivalent to appartements but without quality or decency. Or decents hotels that are more expensive than a normal appartement.

Ps : I appologise for gramatical errors. I'm bad at english grammar.