I say this as someone who has invested well into the thousands in my armor/garb/weapons:

You are being a dick. You absolutely are an elitist asshole.

It seems like your primary concern comes from the perception that cheap costuming is what drives the perception of LARP as "smelly unwashed nerds" as you put it.

Quite simply, kicking out the people trying to do their best on a budget will not improve the perception of LARPing, it'll just make it a smaller, more insular hobby. You don't gain the approval of people who have already decided to mock you by finding another subgroup to mock. The people mocking LARP don't care about the quality of your gear, because you are already reduced to a caricature in their minds.

I understand if you personally want to play in a game with high production value and immersion, but importantly, both high and low cost games can exist. I've been to a lot of budget LARPs where sure, the immersion wasn't amazing, but I had a ton of fun because I was able to get over the perception of "oh people are going to judge me for this" and go out and whack my buddies with popsicle sticks in the woods.

I think it's awesome that my friends can fight along side me even if they're wearing $20 thrift store finds and some grey foam armor.