FIrst of all, the guy in that video has no clue what he's talking about. He's just probably read a lot on the internet, and maybe even a book or two, but seems to know absolutely nothing about the subject from a practical perspective.
That said, I had basically the same questions that you have now maybe 10 or 12 years ago. Not about MMA vs. taiji specifically, but really about how would one know if they were learning a bullshit martial art? My solution was to find some people who had actually worked in the field of violence. One thing they are all very clear on is that there are different types of violence. Consensual sports fighting is different than fighting in a bar, and both are different than defending yourself against criminal assault. The nature of who you're fighting in those instances is very different, as well as the context in which the fights occur. So the first thing is to define what kind of violence you either want to participate in (sport) or protect yourself from (self defense). (Those are two locations on a spectrum, there are lots of others, i.e. if you have an older uncle who gets violent when he's drunk, that's not consensual, but you also can't punch him in the throat at a family picnic.)
Once you know what realm of violence you're looking at, you have to understand that a martial art is a set of tools that can be very effective for fighting, but won't by itself make you a fighter. It's the same as how an expensive set of tools won't make you a great carpenter or electrician. At the same time, I can be a great carpenter and have really nice tools, but if those tools are for an auto mechanic, they're not going to help me build a house.
So you're questions are valid, but I think you might benefit by looking at the broader context of violence, and then come back to whatever art interests you and ask yourself, "does this fit my needs for what I want from a martial art?" Personally, I like the fighty stuff, but there's other stuff that I like, as well, and if I'm going to commit to learning something as difficult as taiji gongfu, it needs to fill more than one need (but fighting utility is, in fact, one of those requirements).
If you do decide to do some research on violence and self-defense, I would recommend finding people that are recognized as experts by other experts in the field, and who understand that fighting only happens once a lot of other stuff (your *real* self defense, so to speak) has failed. Stay away from the guys who claim to be the deadliest, most qualified, or the only ones on the block/internet who know what's up.