What precipitated the emergence of wu shu?
Well, there seem to be two stories here, and from what I can put together, I think it's probably a combination of the two. First of all, the Cultural Revolution brought about a great decrease in the way the Shaolin monks practiced their tradition. With the return of some of the monks and the re-emergence of the temple in the late seventies, some say that traditional gong fu was not practiced "in the open" as frequently as it had before. A little "window dressing" to hide it's true secrets may have been in order at that time. Then again, it was probably not uncommon for traditional gong fu to have some secrecy associated with it in the past; even if you try to analyze some of the maneuvers within some of the traditional forms nowadays, even to the experienced eye, some of the applications are bewildering. No, I seem to think that much of the traditional gong fu had some built in secrecy to protect it from being freely distributed.
It seems that the true emergence of wu shu started in 1984, when the National Athletic Committee of the Central Government decided to include gong fu in it's national agenda of practiced sports. Remember, when the movie Shaolin Temple came out in 1982, many, many mainland Chinese viewed it, and it caused a sudden resurgence in Shaolin gong fu popularity. The proverbial cat was out of the bag, and everybody wanted a piece of it. But, because of the nature of traditional gong fu, it didn't necessarily lead to quite the sporting nature that the sports enthusiasts in the Central Government quite wanted. Or, more specifically, if this was now going to be a sport in which competition was going to be an aspect, it was going to have to be changed so that people of superior athletic abilities could appear better performing it than people with less skills. Traditional gong fu was oriented towards health (mental, spiritual and physical) and combat; it had to be "reoriented" so that one could try to "out do" someone else performing it. Kicks became higher, as did leaps and jumps; stances became lower, and the forms became more convoluted and dance like. Whether this was dictated by the National Athletic Committee itself, to change the forms (which I tend to doubt), or, was a response from the early schools that were starting to form in the Shaolin village (that needed to make a name for themselves now on the national scale), is not really clear. I tend to think it was the latter. Schools probably started changing the forms, exaggerating the movements, adding movements, and making things more "dance like" and "pretty" so that their students, who were going to compete in the new national competitions, would win and bring home fame, and with it, future students. It seems pretty clear; why should fifty students in a competition each do Xiao Hong Chuan, when they can each do some subtle or profound variation of it, all with the purpose of impressing the judges and ruining the competition? Of course, by doing so, the traditional stuff eventually gets lost, or not taught at all, and the basics, and whatever wu shu forms that particular school prefers, ends up being the new course of study. (Most schools still teach some traditional gong fu, but, wu shu seems to be preferred. It's what the students want. You don't get fame, fortune, or movie star careers without winning tournaments in China).
Interestingly, the monks believe that today's wu shu does not really lead to good fighting skills, as wu shu skills tend to be good more for competing. This was reflected in a few of their comments about some of today's martial arts movie stars; there seems to be less respect for the later, more wu shu trained movie stars than the older, more traditionally trained actors. Traditional gong fu is where it's at when it comes to good down and dirty fighting. Shame it's not being taught much anymore.