As someone who was also considered "A good performer, but needs to work on her technique", I think that while technique (strength and flexibility)is something that you can improve with hard work and dedication, creativity and performance ability is much more difficult to learn or to teach. I also felt a big drop in confidence when I was younger and told that my technical ability was beneath that of my peers, but since then I have steadily worked on improving this aspect of my dancing while maintaining my love of performance and the creative compositional side of dance. I also think that the two (technique and performance)are intertwined and diffcult to separate.
I definitely think that having some basic knowledge of proper technique is necessary to be a good dancer. The ratio will vary according to which discipline you are dancing - with ballet, I think you need to have good technical ability to succeed, with creativity and performance ability coming second. In modern dance, technical ability is an asset, but there is more of an emphasis on creativity. In something like musical theatre, there is more of an emphasis on theatricality and performance ability before technique (although in many cases it is still very important). I guess my final rambling thought is that technique should be seen as a primer or base coat upon which you may apply layers of emotion, theatricality and/or narrative structure, somewhat like layers of paint. It is like...technique gives you a sound foundation on which to build your entire performance. It enables you to express yourself clearly and directly, and holds the performance together - gives it some cohesion.
I don't know...I seem to be in a rambling kind of mood today.