Dan-gun: Soodo - Don't get slowed by the fold
I teach the knife hand fold as it allows me to communicate proper objectives of the technique. The folding helps present the entire body dynamics to help generate power for the strike. Without the fold, the beginner will probably be sloppy and not generate the kind of energy that is possible.
The fold for the taekwondo knife hand is also an opportunity to discuss tactical variations. The fold to me can show deflection of oncoming strikes, blocks, handlocks, throws/takedowns and chokes. It is a great way to expand the technique for more senior belts to link additional tools with basic techniques.
But the challenge is to be able to perform the first strike or block with sufficient speed, and not get too slowed up by the huge folding. Personally I can strike fairly hard without a very big wind up. Of course it'll be more powerful with a nice big pull back, but sometimes you don't get the luxury to do that. A chinese sifu friend of mine puts it nicely "you strike from wherever your hand is". This is very different from the 'traditional' starting point of the hip/ribs where your hand is chambered.
THe fact is that once you get proper technique to generate the required power, you are able to replicate that power using body dynamics - travelling much less distance with your hand. Sometimes this has got to be the way - to sacrifice the pull back or fold in order to make it to the point of impact.
This has got to be practiced during weekly sessions. Otherwise beginners start to get psycho-ed with the hip chamber or big folding movement.