I can't agree with that simply because I'm not too clear on what you think is Salsa in terms of dancing? What is Salsa? On 1 to you? As far as I could remember before the hustle came out, we were dancing the same thing you see today in the Cheetah, Ipanema, Casa Blanca, Chez Sensual and the Corso. Both on 1 and on 2 were no different than today. What is different and should always be is the ability to execute improvisational movements. That is what makes one stand out. Everything else is standard. It was sometime during the Corso era that the hustle came out. Downstairs a new club called Barney Googles opened up and they had a mix of Latin Music and Disco. Both Mambo and the Latin Hustle were being danced. We Latins just happen to Hustle a little better than your average Zenon or Studio 54 patron who did the average plain Hustle because we "added" Mambo turns to it. Mambo dancing was already in existance and full blown. The Latin Hustle did not influnce it.
If anything is going to be called the Modern Mambo that would be LA Style in my opinion. LA has incorporated their Mexican styles like Quebradita. "Salsa" on 1, actually just another style of Mambo, is as old as Mambo on 2. Both Latin Dance styles are Mambo but the difference again is where it originated, of course which step you begin on (which shouldn't be a big deal), and 1 uses Tumbao while on 2 uses clave. Remember Cuba was dancing SON and Rumba and a Mambo unlike the NY style. I don't understand the "contemporary" Salsa dance term. It is not heavily influenced by the hustle. Again I say it's the other way around. Old Mambo is Palladium Mambo and that Mambo is very sofisticated. Some can't even do what was done at the Palladium today. Timing, styling, shines and improvisations were very important in connection to the music. You never saw someone (a dancer by title) on 1 or on 2 offbeat like you do today. You never saw someone (a dancer by title) do continuous spins and turns that covered more than 1/3 of the dance number. Style/sabor was the bottom line. What is Salsa dancing if not Mambo with another name? I think this a matter of popular terminology, just like "some" of the Music (genres) which many call Salsa and it's really a Cuban Son, Guaguanco or Son Montuno, of course excluding all the Willie Colon, some of the Palmieri, Noro Morales, Charlie Palmieri, Luis Perico Ortiz, Bobby Rodriguez, Joe Cuba, Orq. Flanboyan, etc. recordings since they recorded both Cuban and NY Sounds.
The hustle had a major effect on the way people were dancing to Salsa at the time, and that mix created, as you say, the latin-hustle, and eventually became the dance we call Salsa now.
Modern "mambo", as some call it, is just Salsa that, like the mambo, was danced on two (although not necessarily the same on-2 that most contemporary on-2 dancers use). It is much closer, in look and style to contemporary Salsa (with its heavy hustle influence) than Mambo, although I have seen a very few dancers dance the Mambo in that old style.