I don't think theory can kill music, nor is theory seperate from music. If the definition of theory were 'unnecessarily complex stuff' (which it probably is to some people), then it might, but it isn't. The purpose of theory has always been musicality.
There are many tools with which we can try to understand what we hear. Why does V or V7 sound like it wants to go back to I? Knowing why can help us know how and when it might be appropriate to apply a V chord, creating the expectation of I whether or not we move there (or doing something else with it entirely). This is just one example of how theory can be useful.
Theory isn't a bunch or rules and it doesn't exist for the sake of making the music more complex. It's always guided by the composer's ear. Theory has never done anything but help me create progressions and melodies that sound good. By knowing some basic theory, I have an idea of how I can harmonize a melody before I play a note, so I don't waste time groping around in the dark for something that might work. I also get ideas of unusual approaches to use. My improvistation makes more sense and sounds more musical when I have an idea of what's going on and how notes lead to and interact with other notes. If I create a dissonance, I'll want to understand how to resolve it in order to make the next note choice (whether I do resolve it or not is a choice that I can make from there, depending on what sounds good).
Working without theory often ends up as a reinvention of the wheel. A lot of people now have a romantic notion that theory will only kill their musicality and their muse (I'm not talking about anyone on this board). I understand where that's coming from, but I think it's a misunderstanding of what theory is and what it can do to help. I had a bandleader who told me that theory would limit her when she wrote music, that it would destroy her individuality. In reality, she only ever played standard chord progressions and melodies, often sounding almost exactly like a song she knew or heard on the radio. It isn't as if this is a bad thing, and I'm not trying to imply it is, but it does show some flaws in her reasoning that, without theory, she is more original.
It's my hypothesis that theory would actually open up her options and allow her to create something that really is hers, or at least something that doesn't sound exactly like what she's listening to on the radio, unless she wanted it to. She'd probably also use some non-power chords occassionally as well, but she'd need a little theory in order to know which ones might 'go together' to achieve the sound she wants.
I guess I'm just trying to say that there are no rules, just ideas.