I can't argue with anything you've said.

The people who teach good kata application and drilling don't teach an unending string of "a" "b" "c", it's more universal than that. Again take shuto as an example, just have someoone fire off punches at you and use shuto, it's a wedge, a strike, it works inside and outside, it doesn't require a specific attack or circumstance to be effective.

AS far as kata application, if you take the people who are bad at it and make that the standard, then ya..that's what you'll get. As I said though there are people out there who have put out really good material, Kane and Wilder, Iain Abernethy, and Vince Morris/other Kissaki Kai guys are the people I would look at, none of these people are hacks in any way.

As far as not 'needing it'..well yeah you can get by with just kihon and karate sparring, but personally I don't want to do kata unless it's linked to some kind of functional two man practice and combative use. Id on't see a point in doing the katas without understanding what they are for.