Hands down to hide intentions is not a factor in WTF sparring, however; no meaningful hand attacks are allowed and what are allowed can be directed only to the body anyway, so guarding the head from the fists at close range (the primary reason for a hands up guard) is not a factor.
You guard your head from kicks though. Many competitors go off the line to the head. the hands down position hides your intentions in a taekwondo sparring situation in a similar fashion that it hides intentions in a self defense situation, because it relaxes an opponent and makes them think you aren't going to attack or aren't putting pressure on them. It is a psychological strategy that many people fall for. You'd be amazed. Easier to show that discuss in words.
So far as I know, taekwondo is the only martial art who's sport aspect emphasizes a hands down guard in competition. This is mainly because WTF taekwondo is one of the few martial sports with little to no hand usage. Were the tournament rules to allow hand strikes to the head, I'd guarantee that the guard would change.
Taekwondo doesn't emphasize having your hands down. People do it because they understand the concept that you don't put your "shields up" to use a star trek analogy, if you are not in red alert. In boxing for example, boxers keep their hands up primarily because they are standing within striking range of their opponent at all times. The ones that went in and out, like Roy Jones or Muhammed Ali, tended to keep their hands lower.
Also, while the poomsae may start off in a hands down position (joon-bi), they don't stay down; they tend to stay mid to shoulder level during the execution of all of the kicking.
http://www.youtube.com/watch?v=XMhY2Ioeof8&NR=1
You are assuming that Taekwondo competitors keep their hands down even when they are in kicking distance of their opponent. the fact of the matter is since the increase in points for head kicks, and the failure of lajust to score points to the body, competitors have been keeping their hands up to guard their head because that is the only point that often gets scored.
Any meaningful attempts to relate the sport directly to self defense fall short because the sport is way too focused and doesn't account for many of the very obvious things that can happen in an actual fight (such as what to do when an opponent gets inside of your guard and starts punching your face or when he kicks your non kicking leg).
Again, you are assuming that your opponent gets inside your guard and is able to get within range to punch your face. I think that is a very big assumption. Again it is easier and more believable to show in person than to discuss online. When I first opened my own dojang over twenty years ago, it was during an era where people would still come to "challenge" a new instructor. I would stand there with my arms at my sides and people (including students) would play what ifs with me, including what if your opponent punches you in the face. I can tell you that for the majority, once I started kicking them in the leg, their focus changed from punching me in the face to getting me to stop kicking their legs.
In fact, the last time I got into a physical altercation, I was at a bar watching Monday Night Football. I was wearing business attire and I was sitting next to some local guy who was taller, bigger and younger than me wearing a lumberjack shirt, ripped jeans, and a baseball cap. Every time I would say something he would say some crap to put me down. After the first quarter, I told him that I was leaving now, but if he wanted to he could wait outside for me while I used the bathroom. When I left, he was waiting for me outside and tried his best to punch me in the face, I just did long off the line roundhouse to his leg or long padduh chagi to his leg. He kept coming and I just kept kicking his leg to the point where he was in tears. Finally I felt like enough was enough and so I faked to his leg, which drew both his hands down, and he lifted up his front leg, and I came over the top with a punch to his nose. But at the last minute, I pulled the punch and didn't follow through. He stood there with his broken bent nose, tears in his eyes, and yelled out "you broke my nose!". One drop of blood came out of one nostril, followed a few seconds later with a gush of blood all over his shirt. At this point, the security guard came, and asked me if he should call the police, to which I responded, "no need, I think our discussion is over."
I can tell you numerous other similar stories from my own personal experience and the personal experiences of my students, both in or out of the ring. You might be concerned about keeping your hands up because of face punches, but we aren't. you may believe that tournament fighting is different from self defense, but we don't. it's all the same to us. If anything, street fights are much easier because you are generally fighting someone who is not trained all that much (maybe some training) and they have a distinct disadvantage because they don't know what we are about. In tournaments, especially high level tournaments, your opponents have video of you, know you and your style, and are specifically training year around to beat you.
But to the eyes of many well informed people who know what they're looking at (as opposed to armchair fighters who never take a class but watch UFC fights and thus think themselves expert), it is a sport that has a marked difference from the rest of the art. Puunui does not see it that way, but he is probably the only person that I have conversed with who does not.
The fact that I am the only one who you have conversed with who does not believe like you do only speaks to the fact that we speak to different people. I think the point that is being missed here is that this isn't my personal opinion, but rather it is the personal opinion of the pioneers who founded and created Taekwondo, including but not limited to practitioners such as GM LEE Won Kuk.
Where did GM Lee get his ideas from? Here is a quote from JKA Chief Instructor NAKAYAMA Masatoshi Sensei: "During the years I was in college, Master Funakoshi developed and systematized Shotokan Karate into three basic area of training -- kihon, which is basic training in fundamentals; kata, which is formal exercises; and kumite, which is sparring.
He taught that these three areas are one and that they cannot be separated."
Please note that Funakoshi Sensei does not mention or focus on self defense, but rather sparring, specifically competition sparring.
That is the kind of practitioner that you are arguing with, Funakoshi Sensei and the pioneers of Taekwondo, who felt all aspects of the art are one and there is no distinction or separation. I am just the messenger. If you have a problem with Funakoshi Sensei's beliefs, then your problem is with him, not me.