In my experience it's not that similar to the Lolita club-clique thing you're describing.. I attend a large fest-style mediaeval fantasy system in the UK, where a small event has 100 participants and a large one 3000.

The societal dos and don'ts within a system basically come down to:

1)Attempt to fit in with the norms of the game.
Ask around before you play. If the system has really high quality costume requirements, don't show up in a sweater painted silver for armour. If it's known for serious roleplaying, don't make your character's name an OOC pop culture reference. If it's known for being all about the fighting and not so much about the roleplaying soap-opera, don't make a character who won't fight and is all about his angsty past, or what have you.

2)Don't cheat.
Take your hits, don't pretend to have abilities you don't. And if you're not sure if you were hit or not, assume you were.

3)Don't be a jerk.
See: Real Life. :P I mean, you can *play* a jerk, that's fun! Just don't be one out of character.

4)Don't do things that would break people's immersion in the game.
Like don't start singing a song with modern references aound the campfire during time in. Don't call people by their OOC name and drag them out of character unless it's important.
This is the one that is the reason for "don't wear a watch," (though watches don't bother me as much as jeans, Metallica t-shirt and white runners with some armour chucked on top in medievalish LARP.) Some people find poor costume breaks their immersion.
Everyone slips out of character sometimes, or makes some OOC jokes. Just try to limit it and make sure you're not doing at at really inappropriate moments.

4)Rule 7.
Don't take the piss. :D

The big difference with LARP and what I'm gathering form your description above is that in LARP, there might be loads of complex and confusing social rules in character, and your character might come across as a naieve peasant and get some unpleasant comments for not realising he is speaking to The Mighty Yellow Ninja, Supreme Head of the Bardic Order! or what have you, but that wouldn't be the players making fun of *you*. I've known some people who play really nasty characters give a horrendous earful IC to a character, and then slip OOC to give the player a pat on the back, let them know it's all IC and there's no hard feelings in real life, and offer to buy them a beer.

As for keeping track of spells and such, in the system I play there is no "throw a bean-bag." If you hear a spell, see the caster is pointing at you and are within the distance of that spell, then the spell has been cast at you. (This can be clarified by the caster where it's not clear who they're pointing at by saying "By the power of Magic I command you sleep, you in the spiky armour and red helm!") You'd think it would be almost impossible to notice, but your ears very quickly get sort of primed to prick up and notice when someone shouts a spell vocal as opposed to a weapon damage call or "AAAARGH I'LL KILL YOU IN THE FAAACE!" even in a very chaotic battle situation. In my experience battles are mostly more spread out than the illustration above would indicate, so not everyone is shouting in each other's ears.

Anyway, in short, LARPing is absolutely awesome. It's dress-up and make believe, running around having swordfights and doing magic! You get to play a character who can achieve the dizzying heights of power, being head of a nation or commanding a battle line, and unlike tabletop gaming, you get to watch people scurrying to do your bidding! And possibly plotting to stab you in the back with a poisoned blade at the same time, but that's one of the things that makes LARP more interesting than real life.

Hey, thanks for taking the time to write this! You make it sound like great fun. I know some pretty great folks who like to LARP. It sounds a lot like when we used to play 'army' as kids, so of course gets two thumbs up in my book.