Rules if strictly enforced, can be both good and bad.
I'm more focused on actually being able to defend myself, so sparring under rules which limits my options, would be a disadvantage later if I get into a fight in the streets later in my life.
However, for sport reasons, and entertainment, some rules will be needed or the sport wouldn't be interesting. For example, if you allowed more grappling in Judo, then it would turn out to be a ground-hugging fest instead of the spectacular throwing art we all know and love.
Rules should be set by abilities, I agree. When I spar with other black belts and such, there's no need for protection or silly rules like "no strikes to the head" and such because we know what is safe and what isn't.
But yes, you are right.
And judging from your age and the time you've been in this MA 'industry' I should be asking you if I'm correct or not
afterall, I'm still a noob.