Why people pay to be merely spectators at Ren Faires?   Like CS said, same reason they go to Disney, the cinema, cruise the fjords, etc. Purely for entertainment. It's different.

Should Ren Faires be regulated to be more sensitive to real history? I would welcome it, but would it have the same appeal to the average punter? RFs are after all a commercial enterprise. Did anyone make Disney adhere to recorded history when they produced the feature Pocahontas? I remember being lived as were colleague teachers when that film came out.

As said before, there is some cross over between fantasy and historical players for a variety of reasons. Often merchants and artists can sell their wares at fantasy events to help fund playing in the historical one. It is an expensive pass time, putting together authentic, garb, kit, attending events, learning a trade (weaving, leather work, etc.) or skill (fighting, barding, scribing).

Most everyone Andie knew in the SCA spent their weekends, evenings and holidays attending events or prepping for events. Summer vacation was the 3 weeks of Penssic the SCA war between the Eastern Kingdom and the Kingdom in the West held annually (August) in a field in Pennsylvania. They frown on conventional camping gear. Players strive to make or buy a proper pavilion, build rope beds, armor, weapons, instruments, lanterns, cooking and eating gear. It all costs. God do I know it costs, and all I tried to do was make authentic garb using authentic materials. Cost to apply for your Arms device. Cost to research and publish to gain an Arts and Sciences designation and to rise in the hierarchy. Very expensive. No wonder they do Ren Faires to supplement income. OTT? You betcha. Ya gotta love it to dedicate that kind of time and money to it.

Also, I don't doubt there are a fair few musicians who rely on RF's for a portion of their income. Mediaeval Baebes, Blackmore's Night and the like. I saw the Baebes at an event called Joust at Berkeley Castle. The Joust was put on by a paid reenactment group from Florida. They were pretty authentic, in garb, kit, activities, but there were also plenty of stalls selling pure tat. Again, commercial enterprise for the paying public.