So the guy in the Blue tracksuit throwing beanbags at you yelling lightningbolt, doesn't make you think of a guy in blue robes, casting lightning bolts at you. You'll see him as the guy in the Blue tracksuit.
I tend to agree with you, actually. LIONE has a very high costume quality over all. We endeavor to put our scripts (the LARP term for NPC's) in good costuming, and the players really go all out. The only time costuming suffers is in extreme heat, but even then it's still pretty solid.
When it's roleplaying, you see the d6 on the battlemat (your character) opposed to a d4 (an ogre)but when the DM says: "The ogre wildly swings his greatclub at you and strikes the barren ground in front of you as you step back." You can picture it. I think that is why larping doesn't appeal to me.
How about this? When the large man in front of you wearing ratty bloodstained burlap (and a very good laytex Ogre mask), wielding what appears to be a 5' long club, swings at you, and you jump backwards just in time to feel the tip of the club whoosh by your chest and then counter with a quick thrust of your own while the beast recovers... there's no picturing there. There's very little suspension of disbelief. Except for the Ogre's call of "8 damage!", which you know would crush your puny human frame, it's all right there in front of you.
Spells aren't just declarations, they're incants. "By Divine Power I summon LIGHTNING!" is evoked, and then the beanbag comes flying at you. The beanbag isn't a special effect - it's components. Spell packets are in-game items. You can try to dodge that spell (i.e. make your saving throw), or watch forlornly as it hits you in the chest/arm/leg/shield and you take 15 points of damage.
A tabletop game has never scared me. A tabletop game has never had me in a situation where I wanted to accurately portray grief by summoning up fake tears, or love by pitching woo to a young elf lass for hours, or rage by screaming and running top speed across a field at the monster that dared to kill my brother. It's one thing to say "I scream, and charge the troll!", but it's a whole new world when you actually look across the field, see the green-skinned horror laughing at you, and you pick your sword up over your head and emit a roar of pure rage as you run, top speed.
That's why I love LARPing. I know a lot of you think it's wierd or over-the-top... and I know that my sentiments will probably reinforce, rather than dispel those misgivings, but as I pack for my adventure weekend right now (leaving in about 3 hours), going through my costumes and weapons, making sure I have everything I'll need, I can't help but feel that little burst of adrenaline when I take my sword in my hand... even after 12 years.