You are 100% right at everything you just said about being street legal in the common areas of the hotel. When we see people breaking the rules, they will be sent to their rooms to dress appropriately.We will be at Atlanta, which will be our fourth SM.
I wear a dress down to the party area. A fairly sexy dress, I hope, but an actual dress. The organizers ask everyone to be "street legal" in the common areas of the hotel. This request is routinely ignored, and I have definitely seen some hotel staff who looked uncomfortable running into basically naked people in the halls. This is really too bad, and I do worry that if it continues it might be hard for them to find hotels willing to host the event.
I don't personally dress in theme for the nightly parties. I would guess that about 1/3 of the attendees dress in theme. Just wear something that makes you feel sexy and you will have a great time.
We do not require guests to dress in theme, but do encourage it. Like you said, be comfortable and sexy.
Cheers,
Tina~