The part in bold is certainly true. We know that corresponding to the arc of the adrenaline rush in fight-or-flight reactions, there is very dramatic loss of fine motor skills. But given the history of kata, and MA forms in general, it's most unlikely that the intended applications depended on small muscle control. If you look at the kinds of bunkai proposed by people like Iain Abernethy and Rick Clark, it's clear that only large-muscle movements and coordination is required. In that sense, part of being a good application is being robust in the fact of this programmed loss of small-muscle abilities.
But beyond this, it's also true that any applications you come up with need to be tested under as realistic conditions as possible. That pre-testing will, if you do it right, sort out the effective applications from the ones which don't hold up. Since part of `holding up' is just this matter of being able work even when fine-motor abilities are lost, it more or less follows necessarily that really useful training will have to include enough potential violence to induce an adrenaline response that mimics to some degree what happens to the defender in a real, violent encounter. Otherwise, you won't really see whether the techs work in the crunch. The people who think about realistic scenario training take this aspect of things very seriously.
The K.I.S.S. approach is exactly what's needed to yield applications which hold up under the horrible stress of actual combat, with its loss of fine-motor skills, tunnel vision, tachycardia and all the other conditions that are biologically programmed into us in response to attacks. So far as I can see, the BCA guys that Tez mentions, and the whole BCA orientation, is probably the leading edge for this sort of kata analysis and training in the world....
... but aren't you going to be going to one of Abernethy's seminars, Tez? When is that?