There are several reasons why WTF Tae Kwon Do came to emphasize Olympic-style competition.
1. At the time of the founding of the WTF, Korea was essentially a 3rd World nation. It wanted world recognition, to grow and be accepted by the established nations. To do that, it had to have something to offer the rest of the world. Tae Kwon Do as then practiced was growing worldwide. But as long as it stayed a traditional martial art, it would only grow so much. By aggressively marketing itself as a competitive, world class sport, other nations would have to take notice. It didn't happen overnight either. It took almost 30 years from the time Dr. Un Yong Kim stated his objective of Olympic inclusion to it actually happening.
2. WTF free fighting is a natural offshoot of what was happening to Tae Kwon Do in Korea. The WTF formed from the KTA (Korea TKD Association). The KTA formed from the various kwans merging. And THAT happened because up until the formation of the KTA, the various kwans settled their difference with combat between members. Some was through the Korean TKD Championships, some was on the street through actual combat. My Grandmaster, in fact, was one of the Korean national free fighting champions. In those days, it wasn't point fighting. Other black belts from other kwans literally wanted to hurt you to defend their kwan's honor.
There are also several reasons for the rift between the WTF and the ITF:
1. Gen. Choi's dictatorial style of management. Gen. Choi was good at many things, but diplomacy was not one of them. When the KTA formed in the early 60's, he insisted on turning into his own personal organization. Problem was, the KTA was composed of various kwan heads who didn't like being told what to do. Choi's kwan (Oh Do Kwan) and the Chung Do Kwan were close anyway. But the other kwans became resentful of Choi's dictatorial style. These included how he ran the KTA and his claim to have invented Tae Kwon Do.
2. Gen Choi made, I believe, a goodwill trip to N. Korea in the 60's without governmental approval. He definitely made one in 1980 with his team, again with no governmental approval. North Korea is South Korea's enemy, regardless of how close they are and the fact they used to be one. They are now enemies. Choi didn't seem to understand this. Because of his North Korean trips, many in South Korea see him as a traitor. Because of his policies, the government told him to leave South Korea in the late 60's. It is well known that after he left Korea, he pursued TKD development in many communist countries.
As a point of interest, I have a photo of my Grandmaster with his free fighting team members in 1966. In this photo is Grandmaster Park, his teammates, his coach, Mr. Uhm (Chung Do Kwan head), and Gen. Choi. So it didn't used to be like this.
