I've stayed out of this thread, but it has been an interesting one. Here is my observation/experience. My KJN was on the Masters delegation committee for the '88 Olympics, and was part of the '92 Olympics as well. He was Vice President of the USTU. He was involved politically to spread TKD.
We never practiced the KKW curriculum.
We did compete, if we wanted to, at USTU functions back in the day. If we wanted to compete in poomse, we had to go learn the appropriate form for the rank, but that's about it.
My KJN became apprehensive at the direction this push for the Olympics was taking TKD. Limiting the totality of the art. Particularly the mental side. Becoming a sport, meant leaving behind the focus of certain aspects of the art. He also didn't like the looks of the sparring going on, he called it "chicken fighting." I'm not entirely sure of what he meant by that statement, but I think it was a reference to cock fighting, in that there was little blocking, lots of flailing kicks. Keep in mind this was the '80's- mid '90's.
I competed on the junior national circuit in the mid-late 90's. I will admit the sparring strategy was certainly different. To me it was more of a game than it was sparring. Using the rules, bending the rules, to give you the advantage. Hugging, groin kicking, "tap" kicks that would never actually score in a traditional tournament or do damage to someone. It wasn't my cup of tea.
Watching the evolution of Olympic TKD, I think it has grown up a great deal since then, but it's still not my cup of tea. I like being a dinosaur when it comes to TKD. I like the totality of traditional TKD. Although, I wish I could do those 720 kicks
It is a mighty display of athleticism!
My KJN was in the ROK army, taught TKD to both U.S. and ROK soldiers, as well as the Korean national police academy. I think it might be this military background that kept the focus of our association more holistic.
Full circle back to the OP, no I don't think that the Olympics has been a detriment to TKD. I think that, just like Karate, Taekwondo is a fragmented art, which is not a bad thing. There are many "styles" that offer a great many things. You've got the ISKA and NASKA in Karate and the IWUF in Wushu, which, IMO are the equivalent to Olympic TKD. To each their own.. . If there was no demand for it, it would not exist.