What is the goal of your program? If its self defence, sparring, or mma oriented then I'd say nothing is lost. I personally don't see any useful application of forms on fighting.
Since this topic is tagged in the Korean MA/TKD forum, I agree with your assesment. Forms have taken on a different purpose such forms competition, existing only to be performed (or even no real practical purpose other than vestigial tradition) in much of that MA genre.
The further one goes back in karate history, the more relevant forms become to self-defense fighting. They were not developed for competitive MA skills. As such, those branches stressing the sport or exercise aspects of the art had little need for much of what the old forms contain and edited them out or just let them just fade away from atrophy.
Making a kick look pretty is far different than making a kick efffective.
The old Okinawan forms do not look "pretty" and for them to do well in open competition they have to be modified to fit the modern conception of beauty. Sort of like a woman wearing heels, make-up and a push-up bra to appear attractive. It's nice to look at but says nothing of who she really is.
I sort of like wab25's term. There has to be something, or more commonly, a few things, that uniquely holds a specific style together. I don't know about the different TKD variants, but to use my style as an example:
Okinawan karate in general
Upright stance, not very deep with 50/50 weight distribution
Shorter range low snap kicks
Grabbing and pulling the opponent's arm
Specific to Isshinryu
Vertical punch
Blocking with the flat of the forearm
All the above combine to make Isshinryu Isshinryu.