Greetings from the other side of the pond! I'm a Big Gun enthusiast, and although some people here may feel that this subject has been covered in full already, I think there's a room for just a little more on it. So, if you will indulge me...
First, on the subject of what the attraction is. Well, it's not just a desire to shoot things. RC warship combat is a team sport (usually Axis vs Allies). The ships are meant to look like the real thing from about 20 feet away, and rather than get into the whole "what is scale, anyway?" debate, let me just say that I personally love detail, and I've researched the Bismarck for 4 years, during my build. He will launch this winter. Not all combat enthusiasts care about scale details that much, but it's becoming more prevalent in my club.
As for realism: It depends on what you mean by realism. Trust me, the subject is very complex. There are two main "flavors" of RC warship combat. One is fought strictly with bbs at gunwale-to-gunwale ranges, and the other is "Big Gun," which uses varying calibers of ammo, and varying thicknesses of armor, depending upon the scale prototype on which the ship is modeled. In some ways, yes - many of the engagements are Napoleonic, broadside-to-broadside, so it's not lobbing shells "over the horizon" as one would ordinarily think of WWII naval combat. On the other hand, there were sea battles in WWII that were fought at such close ranges that battleship main guns could not be brought to bear. Some were fought by searchlight. Some of our skippers are crack shots, and can hit another ship from 5 or 10 meters out, while others need to run in close.
I really think it would be good for you to attend an event and try your hand at the guns, before you judge. I will say that every person I've seen try it has gotten hooked, to one degree or another, and whether that's good or bad, it is a huge amount of fun.
On whether it's legal (or could be legal) in the UK to have RC warship combat events: As Stephen pointed out, the same conditions existed in Australia, prior to the determined efforts of a small group of skippers who wanted to get permission to hold combat events, and now there are more Big Gun captains in Australia than in the United States. By the way, the guns do fire steel balls, but at such a low velocity that rounds bounce off beyond a range of 10 meters yards or so. Compare this with a standard bb gun, and yes - you need eye protection - but you need that whenever small, fast moving objects are in the air. I accidentally shot myself in the arm at point blank range, once, and while it raised two nasty-looking welts that took a couple of days to disappear, the skin was not broken. Model airplane operation - even so-called electric park flyers - is much more dangerous. RC electric speedboat racing is more dangerous by several degrees. With proper safety precautions, this sport is suitable even for young kids. We have a 10-year old and 11 year old in our club, for example. Everone is covered by insurance, including the land and pond owners, just in case.
Finally, about putting on a historical reenactment: Yes, that could be interesting for the performers and the audience, but nothing puckers your butt like the possibility of getting sunk in battle - even if it's only semi-scale toy boats.
So, Colin: Here's a standing invitation to visit our club in California, and try your hand at running a 2-meter long battleship with rotating turrets, loaded for bear. Check our site for an updated 2009 schedule (sometime in the next coupes of weeks):
http://www.westernwarshipcombat.comBest regards,
Rob Wood
Western warship Combat Club
San Jose, California, USA
I don't think it would matter what the police thought although if they were to read Umi's earlier description I could make a pretty good guess! Most sailing waters in the UK are owned by local authorities and sailing takes place by permission, not as a right. The vast majority of them have already banned IC powered boats on public nuisance grounds so I don't think they would take kindly to a bunch of people shooting missiles at each other's boats whether they fall within the scope of the firearms act or not. Parents with kids feeding the ducks nearby might not be too keen on the idea either.
Having looked at some of the videos I am a little puzzled as to what the attraction of this particular branch of the hobby is. After all, it's hardly as if it is in any way realistic or historically accurate. Basically you've got 20th century semiscale warships fighting using Napoleonic tactics. It seem to me that underlying all this is just a desire to shoot things, in which case why bother to build the boats when you can just take potshots at squirrels instead? 
Speaking personally, I think it's far more interesting when an attempt is made to recreate historical naval occasions as is done by the Portsmouth Model Boat Display team. Lots of bangs, smoke and accurately modelled ships sinking but perfectly safe for the large crowds which thoroughly enjoy the show and don't need eye protection!
Colin