This topic comes up every four years, and every four years people come to same the conclusion that MMA would suck as an Olympic sport.
The Olympics already have Boxing, Wrestling, Judo, and Taekwondo. I wouldn't be opposed to seeing Jiu-Jitsu added to that list, and that is something that is being talked about quite a bit with the 2016 Olympics going to Rio de Janerio. The biggest problem I see with MMA being added to the Olympics, besides the obvious fact that the rules would be watered down, is the very problem that already plagues both professional MMA and Boxing but also Olympic Boxing as well. Judging.
Here is something else to think about...(a brief history lesson)
MMA stands for "Mixed Martial Arts". We all know the original concept for the "UFC" was a Trojan Horse for introducing people to Gracie BJJ, but what really peaked peoples interests was the idea of idea of who will win when you match up one discipline or skill-set against another. That aspect is still a huge part of the sport to this day.
Obviously, the highest levels of MMA has evolved from the days when Tank Abbott could walk into the cage straight from the bar-stool, and it's important for these guys to be well trained in all aspects of the fight game. However, I do wonder if the sport is growing to a point where we start to see a lot of fighters who are "a jack of all trades, but master of none". If MMA were an Olympic sport that would likely hurt the other Olympic sports already in the mix. What incentive would a young athlete have to focus on winning a gold medal in Boxing, Wrestling, Judo, or Taekwondo if they know that the real recognition comes from winning gold in MMA? Granted, Boxing still has the draw to make you a millionaire after the Olympics, but you gotta be REALLY good, and know how to market yourself. MMA fans have bashed Boxing for years for it's problems but, ironically, it seems like every 4 years (or every 4 minutes, depending on how often you check fight forums online) they are upset that they don't share in the same company as Boxing.
A lot of hardcore and some casual MMA fans feel the need to validate the sport to others. A lot of times, that "validation" comes in the form of online rants about how Boxing is dead and MMA is the best sport ever because it is "real" fighting with "all" the martial arts. A lot of those same fans boo and scream like babies when a fight is "boring". They cry; "I fell asleep during that fight". How many NFL games do you think people have fallen asleep to? Seriously, most of those idiots complaining about falling asleep on a Saturday night fell asleep because they stuffed themselves full of chicken wings and booze. A classic combination of drunk and the itis.