Dear Manny,
I'm still new in the martial arts journey, but for what it's worth, here is my opinion:
You are interesting in self-defense. Martial arts were meant to work just for that, but frequently (not always) they're are just not practiced with that in mind nowadays. Everyone here said important things regarding the subject.
So first, taekwondo may work for self defense, but only if your training is dedicated to that aspect. I honestly don't believe the majority martial art schools do that today, and if yours want to be different, it has to focus hard on it.
Anyway... Self defense is something much beyond martial arts. It's much beyond fighting. So, what's the best way to defend against someone bigger than you? Maybe if you have a gun. Ok, I'm kind of joking, but not totally. The point is in a real self defense situation, the physical unarmed altercation should be the last option (and many times you just don't have such an option).
Let me go into examples: where I live it's almost impossible I go into a real fight. Why? First, because I don't work in an environment where it could happen more often (like being a LEO or a bouncer). Second, because if someone attacked me, there would be 0,1% chance my best option would be fighting back.
Why would ever someone attack me? Where I live, there's almost one only reason: to rob me. But where I live a robber would never attack me without circumstances that would put him in great advantage like: 1) the assailant has a gun; 2) he's got me alone against him and his partners (even so, rarely they would be unarmed); 3) there's a fragile and beloved one with me, like my wife or my daugther. Why would I ever, in such situations, chose to risk my life and/or other people's lives instead of only giving my money and going back home safely, after it's over? It's a very complicated choice, and there are many variables involved.
So I do believe fighting is an option, but it's the last option. Seriously, if you live in a hard environment, maybe you should buy a gun (anyway, you have to understand fully the responsibility of having one). Furthermore, self defense begins much sooner. Start watching out for your back when going on the streets. Avoid going out alone and walking around dangerous places (it many times depends on what time it is). Beware of the surroundings, trying to detect people with bad intentions. Try to walk in a way you don't look like a convenient target. Remember women and children are the favorite targets of assailants, so you have to take particular care with your loved ones. A person concerned with self defense maybe should try to learn to have how to talk to an agressor, how to avoid a fight with using words (example: not to stimulate or increase an agressive response from another person). One more thing: we have to remember that an agressor could have a much more prepared to deal with stress over violent situations than a martial artist, once the first can already be used to deal with alike situations, while the later is used to train in a safe, control area. We have to remember that martial arts were created in a reality totally different of ours today, and in that time it was immediately meant to be used as self defense -- and they were even more useful, because there weren't or there were not so many fire guns like today.
Now how to teach this to your students? First, this seems to be out of the martial art class curriculum (but totally within a self defense course), but it could be nice to talk about it in classes sometimes. As I said, I believe martial arts would help in self defense, but maybe an adequate state of mind is more important.
I hope people don't think I don't enjoy martial arts for self defense (sport martial arts are not my type). No way! I just love it, and I'm willing to learn to fight under real circumstances, and all that stuff. But I'm not planning to use that knowledge, and I even think I won't need to use it (hopefully).
Regarding to techniques in a no-rules fight... I could tell you what sounds good to me, but many people here know much more and are more experienced, so the above is my 2 cents, that I hope you find helpful.