The above issue was addressed with a Hotfix for DSL2011FP1; see below:
mbs2.microsoft.com/.../KBDisplay.aspx
This HF auto-populates the LotSerNbrs into the Shipper screen when the Issue Method is set to FIFO (and the Assignment Method is set to "When Received into Inventory), which is how the Inventory documentation states that the FIFO Issue method should work (same concept as the FIFO costing method).
User Enterable is the only Issue Method that allows the user to define the LotSerNbrs that will be selected for Shipment (unless the "Do Not Assign Lot Numbers... option is selected in the Lot/Serial Nbr setup screen for the Item).