Is Taekwondo underestimated? In theory, yes.
Are most Taekwondo 'fighters' underestimated? No.
The problem with TKD fighters (like most martial artists) is that they are trained for a specific sport - in this case TKD. TKD might look like 'fighting' (primarily to people who watch too many films) but it's nowhere near the same thing because of all the rules (a similar point can be made of MMA). TKD practitioners are generally therefore no more suited to fighting than people who lie on the floor swining their arms around are suited to swimming.
There are two exceptions:
1, People who claim to train 'traditional' TKD. This is because TKD was actually designed for the Korean military to use. The original/traditional form from the 1960s is therefore designed to be efficient and lethal. People who practice this will tell you that they could easily kill you - the problem is that they've mever actually killed anyone with it. No pressure testing = no way of knowing whether you can do what you think/claim you can.
2, People who use TKD in MMA. These people are bloody horrible. These are people who have taken the skills they have learnt from the sport of TKD and adapted them (through lots of sparring and pressure testing) into their MMA arsenal. We have one at our club and he's horrible to fight against. He throws Thai kicks and boxing bunches as good as everyone else from his training with us but every now and then you just get smashed in the face with a spinning hook kick out of nowhere. It has, however, taken him a long time to adapt this effectively into MMA.
Conclusion: TKD (as with every other martial art) is only as effective as the person who is using it, and they are only as effective as the way they train.
Watch this horrible TKD/Muay Thai half breed style to see the damage it can do:
http://www.youtube.com/watch?v=mePhUm5OpbQ