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I copy and paste this from the Baguazhang forum, as it is as relevant here as there.

A common misconception about a "fighting style" is that one trains the style and is then stuck using the motions of that particular format. This is a horrible way of using the martial arts, and no good martial artist allows this sort of stagnation.

The martial arts aren't confining like you seem to think. Instead, when you are studying a martial art you must come to see that rather than teaching you a sort of stagnant set of forms and movements, the martial art teaches you how to move in a specific way. My own sifu would teach us a form, then leave us to learn it without much in the way of applicational instruction. We would practice the motion and form for days, sometimes weeks at a time and were expected to divine its purpose for ourselves. It was a few years before I finally understood that the only purpose of the form was to teach me how to react in a broad sense and that the specific motion itself was unimportant when compared to the principle of the motion.

You contend that the set forms are useless in a fight, and I agree with you entirely. A form, indeed a whole martial art is nothing more than a framework from which to hang your own adaptation and muscle memory. And I presume that if you have read more than just this and a few other forums, you must know my own contention that there is no such thing as a master because your body is constantly adapting and learning new things as you slowly move away from the constraints of a tightly-controlled "style" and more toward an understanding that while something like baguazhang might teach you a specific way of moving, you are the one who must learn how to apply and utilize. This is why the martial arts and their training are useful. The term "master" only differentiates between a more advanced student and one just starting out.

To expand upon the thought, you are also correct here. "Style" is an illusion set by an instructor, but an essential one. When you study a style, and your body learns to move in the proper fashion, you can step away from the fundamentals and begin to adapt and change the style to suit your own needs. I have practiced many martial arts over the years, and used parts of each in equal measure to generate my adaptation. If something does not work on an opponent, try it this way. If that doesn't work, try something else, moving in the same fashion but in a different way. This is the true essence of the traditional martial art, which is perhaps a misnomer.

I think it is important to have a style, but I also believe in self expression...A style is important because it teaches the basics, but as you advance in rank, you may begin to use the techniques taught to you and alter them to allow for self expression...The traditional forms of the martial arts are important because it is where everyone must start (the basics)...You have to build off of the basics and as you build off of the basics, self expression is achieved through your own creativity as you begin to learn how to see openings...

Katas (traditional and newer) and forms are excellent ways to train, because they teach timing and breathing as well as speed, power, and flow...Katas also allow for bunkai, which is analyzing katas...By analyzing the katas, a person learns openings...Not only do they learn that, they can also express their own interpretation of the what the movement in the kata is or in other words, self expression...

Actually, I've seen this done. In effect, what you are doing is taking a self-taught street brawler with a moderate level of experience and putting them up against an equally-trained traditional martial artist. I'm sure the guild's MMA guys have seen this one over and over again in the ring. I honestly like the street fighter's chances in this. Training by purely practical application is dangerous at best, but if you survive you can be one of the best. In fact, that sort of experience is what has led to some of the most revered martial arts of our time (Krav Maga comes to mind immediately.) As a rule, practical application is really the only way to properly develop a traditional martial art into what you as a martial artist need to defend yourself in real-life scenarios! So rock on street fighters. Your path is dangerous, but applicable.

"Art" is the application of the sciences involved.
So long as you fallow and understand the scientific principles- geometry, distance, the flow of time in relation to the duration it takes to complete an action- the rest is dependent on the individuals practice and understanding. The byproduct of doing all of this well is the art.

Well, that necessarily true. Mainly for a fact being that like alot of other martial arts. (i'm using karate as an example) The Kata's arent very useful in a fight, because you cant judge a persons movements unless you have great reaction time, and can see it coming. Kata's are more of a demonstration, to show that you have control and grasp of the fundamentals of karate.

Also if you take a look at an anime called Histories strongest disciple:Kenichi. who went through some intense training with all the masters in Ryouzanpaku and i mean intense training from all the masters. There is someone whos similar to him, his name was Muhammad Ali, and a famous quote from him goes something like "Did I like the training? No but the pay was rewarding" and infact, yes it was. He could probably out-box Mike Tyson when they were both in there prime. They both had the initiative to keep something up more then people thought that they couldnt take it. So in the end, if youre trained to do it, then you have determination, and a big one at that to continue and stand up.

Joe Rogan talks about Steven Seagal getting choked out by Gene Lebell

[NOTE: Bruce Lee reference near the end]