I totally agree that it should be a raise. I've faught, but lost that battle.
But pub poker leagues have several characteristics that lead to this rule.
It's short stack super turbo.
It attracts inexperienced players.
It's supposed to be friendly.
We DO enforce the oversize chip rule.
But in a novice's view, putting in 500 or 550 is still expecting change.
Note that in our league, players start with 1,500 chips: 2x500, 4x100, 4x25. So change has to be made often.
Also, whenever this happens, I remind the players that in any casino, it's a raise.