It's my belief if the players that were so flagrant with magic on outskirts were willing to accept it came with the jackboots of the law on your neck, then it would be less of a problem. However, a lot of them that are that blatant, are also the ones who tend to be unaccepting of said consequences.
I don't know that I have a good answer for that.
My answer is usually to just walk away. You have a choice to engage with, or not engage with, any kind of RP that seems like it's not your thing.
It's one thing to be patient and give people a chance, that's perfectly fine. You can try to teach them through positive reinforcement, or just ignore their character's strange behaviour and see if they do it again. Negative reinforcement on the other hand, as you've noticed, doesn't work out; spending your time actively trying to fight against people who don't care about the setting is going to burn you out.
That's the thing with hubs like the outskirts, you've got so many people there for so many hours on end, and sometimes the only excitement that happens all day is an outcast racing Radu, or someone leaving a door open. Eventually you are going to see someone slip up or act out, and the guards can only do so much, whether there's 2 of them or 8 of them, they can't do it all on their own. At the end of the day they are here to RP, not enforce the setting from an OOC standpoint.
You can try your hardest but sooner or later you will come to realise your energy is better spent rewarding the kind of RP you do want to see. Spend time around people who respect the setting - they're not being tangibly rewarded otherwise.
I don't stick around in hubs because of this. While they attract all kinds of activity, that doesn't mean they foster all kinds of RP. Another thing is the misconception in theory vs practice. In theory, sure, the outskirts
should be a slice of Barovia, with some outlander vibes on the side. In practice, most days it's a slice of every approved D&D setting with a little Barovian on the side. You can passively respect the setting and hope it'll be the former all you like, but even if you put in active effort, the results will be temporary.
The dev team seems to be open to/looking into adding more stuff that will curb this kind of behaviour where it threatens immersion, by adding more mechanical consequences. I think this is where we'll see the most success and the most concrete change. It will never be beaten, it will just change forms, but it's a lot better than leaving it the way it is.
But from the player's side of things, I think our best tools are patience, the power of walking away, and reporting excessively bad behaviour. It is a rule here not to adversely affect the enjoyment of others, and it is not your responsibility to try and use tells to let people know they're out of line. If your character can't convince them via completely IC means, it is time to retire from that RP, take some screenshots or a video recording if need be and let the DMs have a chat with them instead.