There's been a range of opinion in the Chinese martial arts community about modern wushu. My own opinion is that the new teachings, while not being practical, keep to the spirit of the origins of kung fu in chi kung - promotion of health and better control of your body.

So, the short answer is that it did become dance-like.

Modern Kung Fu has already 'forked off' a more practical fighting version, Sanda, and there are handful of decent Sanda practitioners in various MMA orgs.

And for routines there is a split between the "dancing" for presentation, called "modern wushu", and traditional routines, that are used to practice actual deadly fighting moves.

I used to train traditional routine, but for it to go beyond "dancing" the teacher regularly scheduled sparring session for students to attempt to use in actual combat the moves (the ones we could test... I made the mistake once of wanting to spar with a particularly weird and ugly move, only to almost get a broken shoulder. happily my partner knew enough to make the move against me with just enough force to hurt a lot without damaging me)

How is karate holding up in Japan and elsewhere? I know kids in the US take it as an after-school activity. Wushu, too, is now a competitive artform, at least for the Asian-American diaspora anyway.

That ship has already sailed.