Then we have to pin down 'effective'.
Great post, I agree. I was thinking vaguely of the kind of general effectiveness most people who do MA would expect - something like, be able to handle themselves in the average non-lethal pub brawl, or be able to hurt or stop an assailant or mugger enough to get away or call the police, or enough to defend someone weaker than them being attacked on the street. Those kinds of moderately dangerous situations where the stuff MA teaches might be effective, are the sorts of situations the average person will expect to be able to handle from their training. And I think most arts that include "full contact" training will be able to give that; MMA guys are probably right that the kinds of "traditional" arts that only have forms and arranged drills, will not be as effective.
However, part of my point that I've been labouring over above is that a "traditional" art that's taught that way isn't actually traditional, it's probably fake. All the authentic traditional Chinese styles, to my knowledge (mainly from amateur study, with some small training in Karate, BJJ and Taiji), train with some degree of free fighting and full contact. Chen Taiji for example requires a long period of solo form training, true, but it's always understood that once the student has a grasp of the body mechanics, he will progress through push-hands and drills, through free-form push hands and other types of drills, to free sparring, and then (having meanwhile added weapons forms) weapons drills and weapons free sparring. The aim in Chen is eventually to be able to handle weapons - various kinds of swords, long staff, "Big Knife" (pike), etc.
(Chen Fake, the guy who made Chen style famous in Beijing during the 30s actually used his long staff in the process of defending a village, "7 samurai" style, from some bandits who had been bothering it. His method was to set up a defence on a bridge to the village that the bandits were going to cross. He ran the first few guys through with his staff, which understandably discouraged the rest of the bandits. So Taiji was effective in that kind of context, at least!)
Another point an MMA person would say is that to be effective in this general way, the style has to be put up against other styles. It's no good just being good at Taiji versus another Taiji player. And of course this is the great thing about MMA, the cross-training. But in China up until Communist times, schools and styles did indeed meet each other in open platform competitions, and people from different styles did share their knowledge (to a degree compatible with the secrecy surrounding those bread-and-butter arts - i.e. the knowledge was shared at quite a high level, by high level practitioners from various styles who respected each other). However, MMA still wins on this front, because the training is done in the open, Western way, almost a scientific way, where things are openly discussed and compared.
Interestingly, though this is good for the progress of knowledge as a whole, it's not necessarily good for the individual styles (look at how BJJ is now common knowledge, so BJJ players no longer have an "edge" in competition, like they did when they ripped through the early UFC).