Hi guys, I was involved in the same festival in Varanasi, India. The kites are Diamond shaped with no tail, made of paper, bamboo and string. The kites spin in circles as nebbian says, until you pull or tug on the line which makes them fly straight momentarily.
We bought a pile of these kites 3 rupees each and 5 rupees for the larger ones and glassed string was about 15 rupees and double glassed string was around 18 rupees. Exchange rate was around 16 rupees per AUD at that time (1991).
We spent days trying to get them to even fly let alone attack an opponent. The locals would have their kites flying 200-300 m away and every time we would get one to fly for more than a minute the guys on the rooftop adjacent to us would attack our kite and saw our string bringing our kites down before we got a chance to figure anything out, and always accompanied with fits of their laughter.
Afetr about a week of practice and spending about 20AUD on kites and lines we finally took out our neighbours kite. We were applauded for our efforts. It's a lot of fun and as good way to while away time in Varanasi, on a rooftop above the crowded city streets looking over the river Ganges above the burning ghats and temples with the skies filled with thousands of tiny coloured kites, very surreal.
Don't know about the gunfire. Lahore is not a city I enjoyed much, too many thieves and the locals were a bit too hard line muslim for my liking. A good experience though.
Good winds,