You have to consider that the land types are different for the northeast states compared to southeast states such as Florida. Florida has soil in which the rain drains out of much quicker. In addition, engineering designs are different for states that generally get less rain than the southern states. The HDSC calculates precipitation Recurrence Intervals for engineering design purposes. For example, Florida sees a mean annual maximum precipitation of about 5 inches in 24 hours compared to 2.5 inches in 24 hours in the northeast. This discrepancy is much larger when you look at recurrance intervals of >10 years (9 compared to 5 inches). This event has the potential to drop 100 year rainfall on the northeastern states. It will last a few days, but MOST of the rain will fall in one day.
This will likely transition into an extratropical cyclone. extratropical (mid-latitude) storms have weaker winds than hurricanes, but are over a much larger area. Most hurricanes have severe wind damage only a few miles from the center in the eye-wall. Tropical storm strength winds extend out further, but even those don't usually extend out far in most storms (obviously there are exceptions such as Hurricane Ike). An extratropical cyclone's winds will cause moderate damage over a very large area. The other thing to consider are trees. Trees in the north are much less resistant to the wind, especially since most still have their leaves this time of the year. The winds in this storm won't be as deadly as a hurricane's, but will be a HUGE issue for damage and power outages.
This is a page with estimated storm surge. This storm will also stick around for a while, so it will be able to pile more and more water up against the shore, as well as have a chance to coincide with astronomical high tides. There are many places in NYC that will flood (although they will be properly evacuated).
If the center hits around southern New Jersey, this storm will directly affect Washington DC, Baltimore, Philadelphia, NYC, etc. This is a very large amount of people to worry about. These people are used to Nor' Easters but this should be much stronger than a typical Nor' Easter.
I do understand why you think this is being over-hyped, especially when you compare it to the smaller but much more powerful hurricanes that strike the south. Overall, I don't expect this storm to cause many deaths; I think the people will generally be prepared. I do see this storm causing a lot of damage and long-lasting power outages. When you have these affects over such a large area, it could take time to get back to business as normal. Lastly, you should look for more information on Irene because it was very damaging, especially with the flooding in NY and VT, where both the infrastructure and the land type is not used to that kind of rain.