That is great insight. I agree with you about the Kata being incredibly important to the traditions of the art. I think there are only a very small percentage of people preactiving that treat it that way, though.
In my own cynical mind, the Kata is the indentity of the art and without identity the International Association of Wak-Dat-Dood-Now can't become popular and open new dojos and make money. Too many Dojos use Katas as the tool to attract and promote students. Make the students feel like they are accomplishing something and they will keep coming back and keep spreading the word about their art.
I am sure that everyone here is very serious about their art and belongs to an honorable Dojo, but when my wife and I met she was an student in Wado-Ryu, she has continued, off and on, with her studies and been promoted. The thing was, I saw her get promoted once when she really hadn't learned a damn thing. We had been out of town a lot, but she attended a few extra classes when we were in town and took tapes of the instructor teacher the Katas with her when we travelled. I was stunned when she was invited to the belt test with the rest of her group that she had been promoted to the previous belt with. After that, I got pretty down on her particular Dojo.
I have seen this kind of thing too often with many different Dojos. If you pay your fees and "try," you stand a great chance of being promoted. I have seen big huge fat obese guys and gals who could hardly walk gracefully pass what should have been complicated katas (and be out of breath at the end of it). Sorta like the way in the military sex and age can give you breaks on PT tests, these people were getting fat breaks on competency tests.
This kind of stuff is what has really turned me off on formal eastern martial arts training in general.