Moreover, the fact that there are people who strive for honesty and full-exposure gives a great deal of cover to those who try to manage their image. For every LJ user who acts as if they're actually writing in a private paper journal, there's another (to paraphrase redhound) putting out press releases. But if those press releases read like someone's private paper journal, it can be hard to tell. And of course, most people pay at least lip service to honesty, so people usually believe most of what you're saying, at least until your words start straying from your actions.
It's even more difficult to tell if you've never met the person in question. Many people read the LJs of people they've never met. Many more only meet the people behind the journal after they read and friend the journal. It can make it more difficult to figure out when they're simply making things up, if you can't compare who they are in person to what they're writing.
(Of course, there's also the phenomenon of people believing their own press releases, regardless of how divorced from reality they actually are. But that's another, possibly bigger topic.)
For some people writing fiction is the point of LJ. For others, it's exposing their true feelings to the world. Still others use it to manage the impressions others have of them.
People are free to use LJ in whatever way they like. I try to make as few judgments as I can. And perhaps what I say is obvious. But it's always useful to keep it in mind.
And hey, it's my journal. I write what I want.