Okay, point taken re Iron Mike, but he is mostly noted as a 'slugger' and not a 'dancer'.

The marking criteria is beyond me too and is apparently far less harsh in Western than in Japanese competitions. I suspect that it originates in the concept that "If you can't do it perfectly in 'training', you will suffer when it is for real". My limited experience of Kung Fu was essentially katas for the 'drill' part, but using them to actual practical effect in 'combinations' when sparring or competing was more creative... I guess the idea was to build 'muscle memory' as part of the overall process. Certainly those who relied purely on the taught sequences tended to lose pretty quickly, while when you watched the winners you were seeing these same katas used in a more modular fashion.
Before the advent of CGI in movies, the 'trick' sequences you used to see in 'martial arts' movies are often quite basic techniques at their root and while looking impressive, are not so effective when it comes down to it. Even I could do the 'spinning swords' bit, but would have been screwed if anyone attacked me while I was doing it.
The point remains, as Carlos put, that 'sport' is about competition and not incapacitating or killing your opponent, so any training can only take you so far. The most removed example would be Tai-Chi, which are in fact combat 'katas' phenomenally slowed down, mock those pensioners at your peril!
It would be how you applied any form of training for real and beyond the rules of friendly competition that determines the usefulness of any form of martial art (in which I include fencing too) and that which divides the 'sportsman' from the 'killer'.