I could've sworn I've commented on this topic several times before.....

It seems to be a common debate in the MA world in general; the value of forms that is. Anway, since you asked here's my 0.02.
There is no substitute for actual combat. Therefore, different tools are used to focus on different areas that will increase your chances of surviving and/or being victorious in the event of actual combat.
Tools like techniques, forms, drills, and sparring all have their benefits but none stand alone as a sole resource for training for combat.
Each tool could have it's own thread for discussing it's particular benefit. This thread, however, is concerned with forms. Most of the benefits I know of have already been mentioned; grafting for instance.
As Mr. Sutherland found out, real life applications can be gleaned from forms as well. Our particular school stresses the "why's" behind the movements of the forms. It's not just a dance..there are reasons behind the moves and it is important that the student know them in order to get the benefits offered from practicing forms.
For this reason I stress "visualization" when practicing forms. I practice, and teach that students should visualize attackers and the weapons they use when performing a form. This helps to root the proper responses to certain attacks in the subconcious so that you will react spontaneously if confronted by an attacker.
IMHO =)