Holi must be the oldest widely celebrated festival in the world. Indians are fond of tracing everything back to the Vedas, but I suspect the Holi rites were in place long before those texts were composed. Though the Holi bonfire has been connected with Hindu legend through the stories of Kamdeva being burned by Shiva's third eye, and Prahlad being saved from a fire in which the demoness Holika was consumed, these tales do little to explain the ritual as a whole.
It's pointless looking for godly explanations, actually, that's not what Holi is about. People gather round a bonfire under a spring full moon, sing obscene songs, and get drunk. The next morning, they gather to smear each other with pigment powders, get drenched in coloured water, and consume enough bhaang to be stoned for the rest of the day. What can be found of spiritual worth in any these activities?
What Holi needs for it to be enjoyable is a community. As soon as strangers come into the picture, the festival threatens to become predatory rather than participatory. That, unfortunately, is how it is in most cities. I foresee a time when there will be large-scale Holi celebrations conducted the way Navratri dances are organised now. I'm surprised nobody's taken the lead yet, I'm sure there's a substantial market out there.