Well, I do think a lot of great stuff from China has been preserved in Taiwan, but I'd never say that Taiwan is the "real" China or that it fully preserved Chinese culture when China destroyed it...but that's because I believe that Taiwan's culture is greater, more diverse and more unique than that. The Chinese aspect of the culture is just one aspect, and while it's a major one, it's also smaller than most people think.
When I tell my friends back home that Taiwan, while it shares a lot with China, is NOT China and in fact has its own unique local culture, they tend to either not believe me or not really hear me, or they're just surprised.
Everyone's so used to assuming that Taiwan is China Lite, or "democratic China", or "the other China" that few regard Taiwan on its own terms. And if you're going to go to "China" and think that Taiwan is basically "China Lite" (because you don't know any better) you won't choose Taiwan.
If people were more aware of Taiwan's uniqueness they would likely be far more inclined to visit. Just as if you think Sri Lanka is "India Lite" (it's NOT!), and you want to go to "India", you'll choose India, not Sri Lanka. Or If you think Portugal is Spain Lite, you'll choose Spain. But those countries (especially Sri Lanka) have done a good job differentiating themselves from their larger neighbors in the global psyche...something Taiwan has not done.
I agree with Kaminoge - the main issue is that Taiwan doesn't promote itself well. After 7 years in Taiwan, I've seen several tourism campaigns come and go. One was obviously made with a local mindset and probably would appeal somewhat to Asian tourists, but didn't take in an international view or mindset at all (the old "Taiwan will touch your heart" CNN commercial). The other was just as bad, and slower (that really slow, meditative one that was 7 minutes long which I think accompanied the "Taiwan: Heart of Asia" promotional effort).
What they really need to do if they want tourists is to hire a couple of foreigners with some PR and tourism industry experience to come in and shake up their promotional efforts, not just locals who can put out a basically polished product but don't get the international traveler mindset (nothing wrong with also having locals on the team, of course, I mean it is their country, but there's a fairly specific mindset I'm trying to get at here that I do find those currently working in the tourism promotional projects lack).
I mean, Malaysia managed a solid campaign that has brought in travelers (Malaysia Truly Asia), "Incredible India" has done some great stuff (http://www.youtube.com/watch?v=iLx2KXwv-6c)...and Taiwan just can't seem to get it right. I don't want to see some guy on a bus and two Japanese girls in a nice hotel room. I don't want to see a hiking group posing on a rock or various pictures of trees and mountains (a few of 'em are OK but you need better quality ones than usually make it into those commercials). I want to see drummers, temple parades, spirit mediums (I really have a thing for spirit mediums), mountain cycling, hot springs, beaches, crazy night markets. I want something packed with culture and scenery, like that Incredible India commercial above. That's what gets tourists to your country, not still shots of temples (which are cool, but aren't nearly artistic or dynamic enough for a pro commercial) or panoramas of mountains without people actually doing something like climbing, driving through or cycling over them.
In the end, though, I'm kind of happy in a way that Western tourism hasn't hit Taiwan. My least favorite parts of every country I've visited have been the backpackery parts. My least favorite parts of Taiwan are the touristy parts, too. If I had to pick a few "winners" they'd be Hehuan Mountain, the stretch of east coast between Hualien and Taidong - Qingshui Cliffs too, and Donggang during a festival. If I had to pick a few parts I didn't enjoy that much they'd be Kenting and Sun Moon Lake. My favorite part of Taipei is Guiyang Street, and I also like the area behind Taipei Main Station with all the DIY shops. My least favorite part is Xinyi and the East District where 101 and all the big clubs and department stores are. My favorite swimming spot in Taiwan is the swimming hole at Longdong. The beach that disappointed me the most was in Kending's main town.
So I'm of two minds about this "let's get backpackers to Taiwan" thing.