In my view, in order to truly incorporate bunkai into the TSD curriculum, we need to redefine our practice of basics, forms, and sparring. The old way of doing it does not access the applications and simply does not allow the students to practice realistic self defense scenarios. Dr. Rush's observations about his student are spot on. I've seen this in almost every TSD dojang I've gone into. It's not enough (and it's not fair IMO) to start teaching bunkai correctly at shodan. Students literally have to put aside everything they know and start over in order to master the techniques. The connection between modern material and the real applications exists, but it is so obfuscated it's like trying to learn how to play tennis by playing baseball.
I start teaching bunkai at white belt. I don't use the gicho hyung, we move right into the pyung ahn sets. Itsosu Sensei designed these for beginners, btw. I have differentiated curriculum for kids and adults and I differentiate the bunkai that I teach based off of the students needs. Therefore, for each hyung, my students practice two "one steps" and they know exactly where in the form it comes from and can explain in detail why they interpreted it like that.
For sparring, we practice our bunkai with resistance and then gradually up the level of chaos until it starts to brush up against the various safety boundaries that I lay out before hand. We do many forms of sportive sparring, but this is only to familiarize my students with it and to test out an extremely limited amount of techniques.
My suggestion for anyone wanting to include bunkai into the curriculum of their dojo is that they start at white belt. If you already have an established base of students, start slowly by adding a new section to your requirement sheets call Additional Requirements. My TSD sensei started teaching in 1987 and by 1994 had a huge base of students. He learned about bunkai and was one of the only people around who started to incorporate it into his practice. In 1994, all of his students were old school TSD and he gradually started to teach more techniques, concepts and principles at each rank with the Additional Requirements section. By 1996, when I started with my teacher, the whole dojo was familiar and well practiced at various bunkai.
Eventually, we have to move beyond the old "modern" approach to karate though. By 2000, we left the Federation and completely redefined the Kihon-Kata-Kumite cycle back to our interpretation of the original version. I wrote my book in an attempt to clarify this vision.
When I opened my dojo in Hawaii, I started with a clean slate and it's been great! I have students who are new and students who have trained in karate before and they tell me that this is the first time the material has really made practical sense. And it's worked in real self defense situations as well. Back at my old dojo in Minnesota and at my new dojo, a few of my students have had to defend themselves and have been successful with as little as six months of training.
So, all I can say is go for it. If you are thinking about Bunkai and want your students to learn it, go for it!