The Hilula of Rabbi Shimon Bar Yochai

There is an ancient tradition that the demise of Rabbi Shimon Bar Yochai occurred on the thirty-third day of the Omer, and that the day of his demise was filled with a great light of endless joy through the secret wisdom which he revealed to his disciples that day - and which were written down in the Zohar. That day was to him and his disciples like the day which a groom rejoices under his Chupah. Tradition relates that its sun had not set till he had revealed all that he had been permitted to reveal - whereupon the sun set and his soul ascended on High. (Zohar Ha'azinu).

For this reason the day is marked by rejoicing, though the day of the death of the righteous is a day for fasting. Such was however the desire of Rabi Shimon Bar Yochai, and many of our ancient Sages adopted the custom of investing the day of his demise with a festive character every year.

Ever since ancient times, candles were lit, accompanied by much public activity at the burial spot of Rabi Shimon on La'g Ba'omer. Rabi Ovadya of Bartinora writes in a letter to his brother in the year 5149 (1389): 'On the eighteenth of Iyar, the day of his death, people come from all the surrounding areas and they kindle large torches…

The Maharil writes that the plague lasted all the days of the counting from Pesach to Shavuot; except that there were no deaths during some of the days of this period, that are of festive character: The second days of Pesach, the two days of Rosh Chodesh Iyar, the one day of Rosh Chodesh Sivan, the seven Sabbaths - which adds up to seventeen days. If these seventeen days are subtracted from the forty-nine days of the Omer, it is found that there were deaths during a period of thirty-two days. In memorial to this, we therefore observe the thirty-third of the counting as a day of cessation from mourning.

Sefer Ha-Todaah- Feldheim Publishers

The obvious question is, why is the day of his death marked by great celebration. And why by lighting fire?

Here's an uneducated guess: Perhaps his death is celebrated because 1) that is the day on which he passed along great wisdom, and 2) that is the day he "ascended on high." (If the sun actually took longer to set that day, we might also be celebrating that miracle. And the torches might symbolize the sun that lingered.)

So why don't we celebrate the death of any tzadik who makes a contribution to the Torah?

here's an article that i think answers your questions.

http://www.aish.com/omer/omerdefault/Lag_BOmer.asp

just a side note, though rabbi mokotovsky (kitov) and many others qoute the bartenuro about lag ba'omer, in the hebrew scholarly journal 'alim letrufa' there is a very interesting article about this letter.
apparently the letter was about shmuel hanavi's hilula on the 28th of iyar, which was also practiced with joy and dancing.
the letter was copied with a few mistakes which led to the ommision of shmuel hanavi's name and led the next copier to assume he meant the 18th of iyar and thus rabbi shimon.