I think asking "is kata practice good for developing fighting ability" is way too broad and simplistic a question. I think it's helpful to break it down further than that...
First, separate out solo kata/form practice (a la CMA, Karate, TKD, etc) from paired kata (a la koryu and koryu-derived arts). In my opinion, the two have fundamentally different purposes, strengths, and weaknesses.
Next, the following questions can be asked (about both general types of "kata" and the specific kata within a given system):
Does the kata help develop some specific skill, understanding, or attribute that can be useful for using the art in an actual fight?
What specifically are those skills, understandings, or attributes?
What different benefits might be gained from different kata (or the same kata performed in different ways)?
Can those skills, understandings, or attributes be developed through some other training method? What are the comparative advantages and disadvantages of the kata versus the other methods for developing these?
Are the kata sufficient to develop fighting ability by themselves without some other form of training? (I'd argue that the answer is generally "no.")
Assuming you find value in kata (and in other forms of training), what is the best ratio of time spent on kata vs other training? Why?
How should the kata be trained in order to maximize the development of the desired skills, understandings, or attributes? I've seen many approaches to kata that I would consider ... counterproductive.
Is this particular kata (whatever you are studying at the moment) really optimized for developing the skills/understandings/attributes most relevant to the particular fighting style you are trying to develop? For example: if your fighting style involves punching from a high guard but your kata have all punches coming from the hip, is that optimal? Should you change the kata to punch from a high guard? Should you change your fighting style to punch from the hip? Is there a good reason to do them differently? I'd strongly recommend against making assumptions either way before investigation.
If you find that a particular kata or set of kata have useful benefits for you, is it necessary (or even desirable) to keep the kata beat-for-beat unchanged in perpetuity? I occasionally come up with short sequences for my BJJ students which could easily be formalized as a kata if BJJ culture leaned that way. The way I think about training them is similar to some descriptions I have read about the koryu approach to kata. However I don't see the need to lock down the sequence and have students memorize if for future use. They're just drills I come up with for the lesson I'm trying to impart at the moment.
Just a thought, but we might shed a little more light on the topic with more focused questions like these.