Elana, thank you for your interest. I consider Larping to be on the cutting edge of educational innovation although Nordic countries seem to have picked up on the potential a few years ago already. To answer your questions, it is worth noting that my school is a public school of choice in Coquitlam, Canada with a total enrolment of sixty students in grades 9 to 12. We use a blended instructional model with face-to-face instruction supplemented by online course material.
We run our larps during school hours and require all our students to participate as part of cross-grade team building. The majority of the planning is handled by about 8 students who are the Non-Player Characters or NPCs. We do most of the planning during lunch and average about 2 to 3 hours per week over 14 weeks. We currently use online collaboration tools to keep our "creative output" somewhat organized, but that still needs some work. Although each game is designed to be run during the school day, we prepare the rest of the students with mini-workshops on backstory, costuming, combat, safety, rules, and character-building. We are currently debating how to extend the time period of the larp to encourage more investment by the rest of the students into their characters.
I totally agree with your insight that this would be great using existing fictional characters and worlds. Our Humanities teacher would like to produce a Shakespearian-influenced Larp, for example.
As practice for empathizing with the Other, Larping can be fun and serious at the same time. Our minority android population in our Cloud 7 larp was created to provide an underlying tension between humans and artificial life where androids were considered property first and had no voting rights or rights to self-determination. But we were hoping to see that humans had much in common with the androids as the mega-corporation of Cloud Corp treated people as property as well.