WOW! I never figured a simple question to evolve into a discussion on so many levels. (But then, simple questions are the most tricky)
I see the idea behind not going all out (we do supplement with bag work though) you do have a little more control...(I hit my friend with a toe right in the hollow point of the throat, when she was choking there for a bit scared me to death!)
do more things, not just your bread and butter technique. In a for real scenario, I don't think I'd go for the fancy footwork, but straight for the pressure points...but then, almost no one in my family was ever attacked and I am planning on keeping with this tradition, while one cannot avoid conflict, one can minimalize the possibility...
I have gotten hit, I hit in return. I know I can take a punch or two, but I guess what I failed to convey, the mental readiness, when I am in the Dojang, I know what I have to exspect. When I walk through the parking lot of - say - the mall, I don't look for trouble (though it is a favorable territory...)
But then again...judging from the instictive reaction of one of our kids, I might be OK: Dad startled son, who in turn flattened Dad with a kick to the 'Wedding Tackle' Dad was out of commission for 20 minutes. I would not retell the story if Dad himself had not told and retold it several times!
In all, I am OK with the contact we make in sparring. If I gt hurt/injured, I will be in trouble! I could be in a full body cast and my family would not find their way to my house to lend me a hand!
But I think, judging from the advancements my friend made, the most valuable part of Martial Arts for Selfdefense is not the actuall technique, but the general Mentality. It's OK to hit and to get hit. Yelling is part of the curriculum. It is so much fun to see the timid white and yellow belts blossom on the way through the ranks. Especially women!
I hope I made some sense here....