I suppose there's a silver lining to everything, in that Bloodsport is still a great movie. It probably contributed to my own interest in martial arts, which has been life-changing (for the better).
And despite it being based on one guy's made-up nonsense, the movie itself does a superb job, especially by the standards of the time, of showing a variety of martial arts done by people who actually knew them. Compare the choreography in it to that in Kickboxer, which actually came out later, and you'll see what I mean. There's better muai thai in Bloodsport than in the movie about muai thai.
Of course, the problem of charlatanry in martial arts remains an issue (and I don't accept the sadly-common belief that UFC is the ultimate arbiter of this), but that's always been the case and always will be. I'm more surprised that a movie studio did so little due diligence.
But even more than this is the fact that someone would be willing to to such lengths to create a facade. I know people do it all the time, don't misunderstand, but I simply don't get it. To me, the fact that I would know that I'm a fraud, even if no one else did, would be crushing. But I guess that's the whole thing with delusion, and perhaps people somehow stop feeling that sense of shame, or at least can bury it? (And of course I'm only referring to those who can conceive reality but just don't, not someone with an actual mental illness that alters their perceptions.)