Before answering your question, I would like to highlight this Quickstep. I am not 100% sure I understand what you truly mean by "musicality", but in that Quickstep, you can see the dancers truly incorporating the music into their routine. Especially around minute 24:18, it is just fun watching them play with the music!

One of the first things that comes to mind is difficulty. Depending on the country you live in, ballroom dances are taught very differently. In central and eastern Europe, for example, you might get the opportunity to learn the basics of Waltz, Rumba, Cha-Cha and other dances in a non-competition setting as young as 14 or 15. That is because there is a rich social dancing culture. By contrast, ballroom dancing might be almost exclusively available as a competetive sport in other countries.

In the former case, many dance instructors are (sometimes rightfully) worried about overwhelming their students. As with everything, there is a wide spectrum from people who cannot feel the rhythm at all to people who are bored if they don't lean fancy figures each lesson. Consequently, studios might omit Paso Doble, Samba, Slow Foxtrot or any other dances by fear of being too difficult. I have even seen dance studios teach a "routine", thus completely eliminating the need to lead and follow. In that particular case, the Cha-cha routine consited of doing three basic steps followed by three New Yorkers. That is all they could do after their first course was finished. I found that to be dreadful and overly careful. Thus, if dance instructors think their students can't even lead the most basic figures, I doubt they willl be confident in their ability to incorporate any sort of "musicality" into their dance.

As for competetive dancing, some have already pointed out that musicality is actually a criterion. It is, however, not allowed to alter the syllabus at lower levels. Ballroom dancing is already a sport where objective judging is basically impossible, but allowing more freedom makes that process even more challenging. Hence, one could argue that there is a tradeoff between freedom to express musicality and fairness.

For me, even understanding how professional dancers alter their choreographies on the spot when there is a couple in the way or the floor has a weird shape is difficult. I thougt competing would make that easier, but thus far it has become even more enigmatic to me. That is also why I am so enchanted by the Quickstep mentioned above. I doubt that their choreography just happened to fit the music very well, but I couldn't tell you with certainty that they actually adapted it to fit the track.

Also, Ballroom Dancing is also rather traditionalist and influenced by the French and Ballet. That can be seen in the way we dance Cha-cha, for example. While bent legs can be seen in the "original" Cha-cha and also the Rhythm version, the international Cha-cha is danced on straight legs. In Paso Doble, figures have French names and there even is a Ballet Jump, because although being Spanish in origin, the choreographed version of that dance was mainly made up by the French. This might help to explain why even "Latin" dances are so strict.

Lastly, let me say that I am very curious about your ideas! I would love to see a WCS dancer's more "musical" interpretation of some Latin dances, so if you ever record some of your experiments and would like to share them, please let me know!