Why is "LINING UP" used as the proper response to a "conditional" line-up instruction?
"Lining up" is not a proper response to a conditional lineup instruction;

"(condition) lining up (brief reiteration of condition)" is correct.

To use an actual example:

ATC: "RYR123 behind landing Airbus 320, line up runway 28L behind"

Pilot: "Behind landing Airbus 320, lining up runway 28L behind"

In my opinion, that leaves very little room for confusion.