Hi,
Thank you for sharing the information!
Yes, the behaviour you are seeing (the parameter switching only between 0 and 1) is the intended design of the current FMOD Unreal plugin.
Your setup sounds correct to me.
If you require continuous occlusion values, you might need to implement a custom solution on the Unreal side.
For sound design ideas on enhancing the perception of occlusion, this related post may offer some general ideas: How to create illusion of source occlusion with reverb
Hope this helps!