What I don't understand is, if you want to do a Lutz and you change the edge from outside to inside, that is called Flutz, but that is actually a correct Flip. The same goes for wrong edge Flip, which should count as a Lutz. Are other real differences between the 2 jumps? As far as I know it is all about the inside/outside edge. Why there is a deduction for the edge?
I'm guessing a partial answer is that the body positions (not just the edge) are different, in terms of approach and take off.
However, something else to consider is that you're only allowed to do 2 of each jump. So if they're really the same, then in a way, skaters who flutz (or lip) are somewhat bending the rules a bit -- in that they get to do more than 2 flips, but just that in terms of points some become lutz-with-wrong-edge instead of 0 points (for 3rd of same jump).