Dear Lilac,
I agree that Tai-chi-Chuan develops each of us as an individual and part of that development is to recognize the connection among all of us. Competition for a prize is not quite the same as practicing Tai-chi-Chuan for your own development. As an example, Push Hands practiced in a good Tai-chi school is very different from that in a Push Hands competition. Forms practiced in a good school emphasize minimal movement and subtlety of expression while in a competition you try to maximize external expressiveness.
On the other hand, if you watch young animals, they often fight with each other. While you could say they are preparing for adulthood when the males will be fighting for the females, watching such animals shows them having a good time. They are gleeful and eager to express their energy. These are the two faces of any practice. One face is your development as a human being and the other is the outward face - the play which all can enjoy, even people not involved in the art, who do not appreciate the inner subtleties. The outer face of an art attracts new people who then, hopefully can realize there in a deeper inner face. Such practices, which can bring people into deeper and deeper understanding of new worlds of experience are called "Hermetic".
I also used to resent the outer face of Tai-chi-Chuan, feeling that people involved in competitions were somehow shallow or missing the point. Many people do remain in the shallows and think of Tai-chi as competing to have the prettiest form or strike the hardest blows. But hopefully there are enough genuine teachers to guide interested people into the deeper teachings.
The fact is that in modern times, people are attracted to the brightest, the loudest, the strongest. Their attention and chi are very weak and are easily trapped by extremes. They are easy victims of marketing forces. The competitions are merely the doorway for many people to enter and discover the inner training.
It is easy for the balance of inner and outer to swing so that Tai-chi-Chuan becomes just a question of memorizing movements or punching the beegeebees out of someone. It the job of the teachers to maintain the proper balance so that competitions are joyful and that it is explained that you are just seeing the outer aspect of Tai-chi - that there is much more to it.
Will we see that balance in the Olympics? That will depend on the teachers who are running the Tai-chi competitions. We will see.