It used to be that these horses were prized. After WWII, when the mechanized world took over for animals (horses) doing work in the farm and for transportation, the German (and northern European breeders) repurposed their horses for the civilian riding market. Very successfully.
In the past, there were “riding horses” and “work horses.” Some were "all-purpose horses…eg., Bessie would work the fields during the week hitched to the plow, take Farmer Johann to do errands under saddle, then get hitched to the cart to take the family to church on Sunday.
These horses were repurposed as riding horses by adding refining blood. They succeeded in the competition arena and the rest is history.
Heck, competition is currently (as we speak) changing the Lusitano breed. Breeders are taking what was a “work horse” used to work cattle and are now repurposing them for dressage competition. I cannot believe the number of Portuguese ads touting 17hh Lusitanos. Two years ago I spoke with the head of APSL, and he told me my old stallion (entered into APSL stud book 20 years ago) would not have been approved into the registry today. So selection in breed stock for what wins competitions (and thus increases prices) is a real “thing,”
I don’t have time to do a lot of research, but I have a bookshelf of old books… As I recall from my reading, since the US didn’t have a native “dressage” tradition, so after WWII, US decision makers looked to Europe to define the criteria to be used in dressage tests. We had a number of prominent ex-cavalry immigrants that helped get the US competitive in the world stage. Here is where partiality for one’s country’s native breeds subtly infused the judging criteria. This is where the preference “bling gaits” starts to slowly creep in. It was minor in the 1950-1970’s. But starting about 1980’s we see a start of the importation of European-bred horses into the US.
There was lots of discussion as to why not include the “high school” (airs above the ground) in dressage tests. The dressage tests as we see today were developed and morphed from what professional soldiers were expected to do with their horses. This is what is called “the campaign school.” Eventing used to be called “the military competition.” Civilians (and women) were only allowed to ride in Olympic competition starting in 1952.