I respectfully dissagree with you.Jordan Hirsch takes care of this one pretty well. (Ayin sham!)
It wasnt a hit till, as you call it "shiny shoe" guys made a more yeshivishe feel to it. These producers made it a hit. Much more people know the tune now than before, so who are you kidding?
As far as the royalties, give these guys some time. As you very well know the amount of money that goes into an album can make anyone tight on money, i'm sure they will get around to it(though i cant speak on their behalf, as i dont know them)
It's pretty obvious that "Gigging Musician" doesn't play on the YU/NCSY circuit much. Shlomo's songs "Niggun Nevo" and "Shabbos Kodesh" were being requested before Shlomo's album was released and well before the Brooklyn JM guys recorded their "yeshivishe feel" arrangements.
In general, there's been a trend wherein the Brooklyn JM artists cop the material that's been picking up in YU/NCSY circles and bring it into their circuit. There's nothing wrong with choosing proven material that way (the cross-pollination works both ways) but pretending that they "made" the songs hits is delusional. And of course, they should pay royalties. In this case, it's especially ironic that one of these performers didn't pay royalties for "Niggun Nevo", given that it was a last minute add to his CD to replace a different track (Rabbi Menachem Goldberger's Lecha Dodi) he'd recorded, but ran into trouble over.
Other songs that went the YU-Brooklyn circuit route include several of the Carlebach revival hits like "Niggun Neshama", "Ki Va Moed" and "U'fduyei".