Ars Magica LARP can be a lot of fun. That said, LARP's benefit from rules-lite systems. If you check out the Fallen Fane, which is an actual Ars LARP, it has no game mechanics at all. This is not an accident.
It sounds like you are well on your way towards using the Ars system, but consider -- just for a moment -- using a rules-lite system while keeping all the wonderful setting. Something like Fate Accelerated Edition (which novices can be playing in five minutes) would allow you to put the mechanics away most of the time and focus on role play and social interaction, the heart of LARP.
If your heart is set on getting 30 people to make and play AM5 at the same time, then it's on to your original questions:
1: I don't have a lot of experience with magic item penetration, so others will answer this better, but I will note that PCs can get their penetration pretty high even without magic items. Especially in a LARP, where there are many opportunities to learn a person's name, snatch an Arcane Connection, and do all those other things which make Sympathetic Magic easy. Penetration is balanced by Parma; if yours is out of balance, you have two options: reduce Penetration scores or raise Parma. Raising the "average" Parma score does not require changing the rules. It just means players who expect to get attacked need to spend more points on Parma, or suffer the consequences.
2: Miscellanea have unique supernatural virtues representing their special traditions; Tytalus have all those rules on spy networks and other organizations. Jerbiton should have the local lord under their thumb. And Flambeau will have all kinds of combat spells and tactics, which will be exceedingly useful in the LARP you descrbe. Some players insist Tremere are the weakest House, because none of them can have a Magical Focus!
3: The trick here is to link Story flaws together, so that players end up role playing with each other. Make the characters with Family Ties related to each other. Make the character with Heir next in line to inherit another PC's position, like "Senior Quaesitor", "head of the covenant," or "Tremere Exarch." Make one character's Faerie Friend the same creature who conducted another character's Faerie Upbringing (a personality flaw, but you see what I mean). This will obviously require a lot of cooperation between player and GM when characters are being made. You might want to establish the local setting first and then push PC story flaws into connecting with that setting. For example, if a player wants Ghostly Warder, well, you already know there's this one ghost in the region, and whoever takes Ghostly Warder, that it their ghost. You have done this because that Ghost is already worked into your stories and plots, you know it's the dead apprentice of another PC, and the son of the local lord, and so on.