It's no substitute at all, it's a superior replacement. Let's face it, if traditional martial arts were so great to begin with, these MT/BJJ guys wouldn't be absolutely dominating the UFC and PRIDE and Vale Tudo and everything else. Even the guys who started in karate or something, looking at how they fight now, it all resembles boxing standing up, and so on. No it doesn't incorperate everything that can happen in a fight thanks to the rules, but sport martial arts evolve (evolution inherently moves towards the better) because the techniques themselves basically compete for survival. That means they're always improving themselves- which is why, for instance, boxers, are so incredibly good with their hands.