A cracker is not the same as your skin. I don't think they have any similarities except for they both may have some salt on them.
I'm betting if we put a cracker in jojoba oil or shea butter it would probably do the exact same thing.
A couple years ago I went to an Arbonne party and wanted to leave half way during the presentation. The misinformation, Oy! The referred to lanolin as animal excrement and were talking about how gross it is to rub an oil from an animal all over your body. First, lanolin is a wax, not an oil. Second, during the party the rep sure ate a lot of cocktail wieners and drank a lot of diet pepsi for someone who was so worried about what goes in and on her body.
One other thing, was she emphasized that they only use Vitamins as preservatives. Eww!!
Lanolin has been used for a very, very long time on babies, breastfeeding mothers' sore nipples, dry lips, dry cracked heels, etc.
I've used it in lotion, lip balm and solid lotion.
We've used it on our sons wool cloth diaper covers, to make them waterproof.
Cons:
Can be very sticky
Not vegan friendly
Just like any other thing in the world, someone can be allergic to it.
Here's some info about lanolin
http://en.wikipedia.org/wiki/Lanolin