It's still a fighting game. and if everyone only specialized in hand-to-hand combat, you'd have a bland game. Imagine a FPS with only shotguns. Where is the strategy in that? There would be no strategy involved, and there would be no gun variety, as in Street Fighter, a known 2d-fighter, there would be no character variety. That is why there are fireballs, people who do fly across the screen, people with stretchy ass limbs: character variation. Oh, and it is not like characters can't get around said projectiles. Most, if not all, have simple ways (in SFIV, a Focus attack will eat that up) to dispose of a simple fireball. On top of that, if "uber-realism" is what gives you a chubby, then there are fighting games like Virtua Fighter. (no, Tekken and Dead or Alive aren't realistic, but hasn't that been the premise of video games since the beginning? The lack of realism? With a plumber who jumps on fictional creatures and stops a gigantic turtle from his princess? I digress.)
Are you not fighting using said "special powers"? How isn't it a fighting game? And I'd like your take on how fighting games(as a whole) suck.