Don't understand why it needs to make the phone unusable. Surely something that covers the cameras and microphones, but still lets you see and interact with the screen wouldn't be infeasible?
A lot of the discussion I've seen around this is people arguing that simply the act of displaying your LED screen at a darkened concert is interfering with others enjoyment of the show. Obviously that's not the problem they are purporting to solve, but I assume it was part of the background of the design.