The 'Looking for Party' flag is sadly underused. It's a shame, because it has the potential to be a great mechanic.
The answer is to somehow link it into the Looking for Group panel.
I'm no interface designer, so I don't know the best way of doing it, but if you create an LFG then you should get a list of people who have set their LFP flag who match your group requirements, and have the ability to send them an invite (ideally not just a blind invite, it would be nice if the invite included the quest name & difficulty)
If you did this, then I could see people using LFP a lot lot more.
Zad