Interesting concept, although it's one that I feel is stretching the jam's theme a bit. Yeah, not everything is as it seems at first glance, but that's true of a lot of horror, so if this fits almost anything does.
It's usable enough, I think, although it demands some ad-libbing by the Warden. I see two significant weaknesses on that front.
Firstly, you've established that the characters have had their memories wiped, so presumably the players don't know anything about their backgrounds. At the same time, you're asking the Warden to have the Horror evolve to fit the characters' specific fears. How do we know what those fears are if we don't know the characters' backgrounds? I think there needs to be some sort of flashback mechanic where the Warden invites the players to fill in their backstory gradually and evolve the Horror in tandem with that.
Secondly, I don't really see a likely way for the players to get out of this. I know Mothership is meant to be hard, but usually there's some way to move laterally when the challenge isn't beatable head-on. Here, once they're loose in the studio, you've established that the ONLY way out is through a checkpoint with bulletproof doors, and the only control for that is in a security room with potentially as many as ten high-statted security guards with armor and assault rifles AND automated turrets, while the best weapon the heroes could potentially have come across is a pistol with a 50% chance of firing one bullet or none at all.
The best I can come up with is trying to take Shane hostage but realistically I don't see security letting them out in that scenario, it'd just create a prolonged standoff. (EDIT: Or I guess they could make explosives in the lab or something. But that assumes there's a chemist in the group, which won't necessarily be the case.)