Yes, on the face of it, it qualifies. Each group member must be using a passport from a country permitted 144 hour Extended TWOV--US passports qualify. You should ascertain if anybody is not going to be using a US passport and whether that/those passports are also allowed 144 hours.. I can't think of any other gotchas, based on current regulations.

Your group will be allowed to travel HK > Shanghai by NONSTOP flight or by international train departing HK's Hung Hom station. The departure to Japan may be by NONSTOP flight or by cruise, as long as the cruise does not go elsewhere in China. International flights can also depart from Nanjing NKG or Hangzhou HGH, should it make sense not to backtrack to Shanghai. During the 144 hours, the group can travel anywhere in Shanghai municipality, Jiangsu province, and Zhejiang province.

Tour group leaders whose members all have Chinese visas generally use a Group queue at Immigration if it's staffed. However, if everyone is using TWOV, I doubt if you can do the same. In effect, each member of the party needs to individually go through TWOV as a stand-alone traveler, then meet up on the baggage claim side. Do not give these members the expectation that you will be able to hold their hand at the TWOV queue. Anybody who is uneasy about this should feel free to apply for a Chinese visa, which will cover them for any eventuality. US passport holders get 10 year tourist visas, multiple entry, good for up to 60 days each visit. It's not a cheap visa but is a good investment for any of your group members who may be visiting China again within the next 10 years.