A couple observations:
First: My original question was about the direction of TKD as a Martial Art for self-defense and combat vs TKD as a Martial Sport, as it seemed to me from reading the WTF site that all they cared about was the sport (which, as I have learned is really all they care about anyway so no biggie). As a result, the use of TKD in UFC matches is...who cares?
Second: UFC != MMA. I've seen matches in three organizations that are classified as "MMA": Pride, K1, and UFC. They use different rules and different ways of scoring which leads to different tactics and strategies. So what? They are just sports, they are a far cry from a serious combat/self-defense scenario. What "works" in one doesn't always work in the other, so it's sorta silly to worry that what works or doesn't work in a UFC or Pride fight means much in what's going to work in a real-world encounter. (To me the best example of that is Hapkido. I've read a lot of posts here and other places by bouncers and LEO's who have used SJM effectively in their jobs, yet SJM is not allowed by UFC rules so does that mean SJM is useless? No. Simply that the sport has rules so the fighters tailor their technique and tactics to the rules and, like all sports, it's artifical but fun to watch, but don't take it too seriously) And UFC, like all sports, goes through cycle of what's dominant and what's not. When I hear the term MMA, though, I think of someone who studies *all* of an art, not just a few hand strikes from boxing and a kick from Muy Thai and a take down from BJJ. For example, I do mostly TKD although for self-defense I've learned some SJM from Hapkido and some throws and rolls from Judo, and at least one takedown defense (I guess from BJJ) etc.. yet I don't consider myself a Mixed Martial Artist simply because I know a few convenient techniques from a few arts. I don't study and train in Hapkido, or Judo, or anything else. Anyway, people who actually study/train multiple martial arts as a way of being well rounded martial artists able to handle many scenarios have a lot more of my respect then people who pick up a few techniques from a few arts for the sake of sport-fighting and call it "Mixed Martial Arts"
Third: To the best of my knowldege, Choi's intention with Tae Kwon Do was just to give the Korean's a martial art to call their own. As a whole, TKD is heavily based on Shotokan; if you want to know "what was Choi's intention" then you could probably look at Shotokan. Olympic style sparring and point-sparring are just sports for training (or for sport itself) and don't encompass all of the martial art itself (an easy way to realize the difference is that basic TKD forms include strikes that are illegal in sparring and defenses againts attacks that would also illegal)
Couple of minor details:
Use of shin vs instep: this is a philosphical differences between Muy Thai and TKD and both have valid points but they sorta contradict. So to say that once must be used over the other is a bit silly
Use of sprawl: I've seen in UFC fights some very effective defenses against an attempt to shoot-in that were not sprawls, so again, a sprawl as a means of defense as any sort of litmus test is a bit silly
On balance: From two feet one can move in any direction. From one foot, with the weight back on the rear foot, mobility is limited
So I guess if one wants to come up with a litmus test list of 'is this what Choi had in mind for a TKD fighter' the answer would be "not really" but if that litmus test is gleaned from the latest UFC fight...I don't think that means anything as far as TKD as a martial art