Having studied Shotokan Karate-do for several years I have to say the same as Josh. It's all in the hands of the practitioner and it has a lot to do with the received transmission.
Juding from many Karateka I've seen and talked with, I would not be surprised if it is more of the later than the former.
Here are some good application demontrations from my favorite Kata (and the only kata I still practice)
http://www.youtube.com/watch?v=g_ofZ6bA3qQ
This one is from the JKA (Japanese Karate Association) and was the bunkai I was originaly taught.
http://www.youtube.com/watch?v=T9MrypCB4AE
The difference is rather easy to notice. It could be easily said that one is more indoor and the other more general student populace but I think that is a load of bull. Like many martial arts in the first half of the 1900's, they gain in A LOT of popularity but lost a lot in the process. I think alot of people are waking up, looking around and wondering where the real martial went in their martial art.
I don't think Master Egami was open minded, really, as much as he was honest with himself. Alot of us are given direction by their teacher/instructors and we never question the why's or how's and while we preserve what they teach us, we never grow as martial artists and the art itself stays dead. A martial art surviving for several hundred years (up until these days at least) survived b/c it was effective. If what you are practicing is not effective, you are not absorbing the teaching in an applicable way or the trasmission you are receiving is diluted. I think Dvivid has an excellent quote in his signature from Dr. Yang about being logical and scientific in your study. I think this is especially true nowadays when most of us aren't required to "put our money where our mouth is".
Caution...Wisdom may cause bruising.