I went the first couple of years they held that festival, and I would love to go again, but it's just not in the cards.
I do know that there are a bunch of private campgrounds and cabin rentals dotting the area, but some are on the other side of the lake. I believe you would still be no more than a half hour from the festivities, though. I also don't know whether or not Dirt Rag scoops those up or not.
Another option might be VRBO or AirBnB. Maybe not any cheaper than the motel, but probably closer and a lot nicer with more space.