The absolute key to a good living world is that the player's choices matter in ways that make visable changes to the world. A tactic I've had much success with in a LARP I run is to make the good guys and the bad guys not clear cut. Everyone has their own motives for wanting to do things, and if the find the magical weapon that will save the kingdom from the orcs, it might be better to give it to the head priest than to give it to the general. And the Orcs have a completely justified reason for invading the kingdom, so maybe the PCs will side with the Orcs once they learn the truth.
Then take the choices the PCs make and incorperate it into the next round of adventures. With a large playership, sometimes you have to just take reports from each table, and the ending that gives the most results is the official one. But unique events(usually at cons) provide a special chance for players to affect the story. Maybe there is some big battle, and some tables are the cavalry section, with special mission, and another table is the spell caster support, who can swoop in and save other tables that are struggling if they suceed in their mission. And one table could be a group of assassins sent after the enemy commander. When character do something meaningful, give them actual rewards. Being awarded the rank of captain because you lead team to intercept the cavalry charge that would have brokent through to the command tent is a cool reward, especially when you know that no other character will have a chance to accomplish that goal again.
