We had the same problem on our trip last August. We also were on the dining plan, unfortunately we had booked the Luau for our last night there, so ended up losing the 1 ts credit they gave back. As I remember, they offered the meal half price for cash customers as well.
They do indeed serve the food even if the show is cancelled. The show stage is in an uncovered area but the dining areas are under a covering.
In our case, it was raining so hard and lightning was horrible. It was so bad, they wouldn't even let us walk out to the luau from the lobby because of the lightning. It was so obvious there was no possible way they would do the show, yet they eventually walked us out to the site in small groups, served the food, THEN said there would be no show. At that point we were a "captive audience".
It was clear, they had cooked food and were going to get us to stay any way they could, weather or no weather.
In the end, it was OK. We would have never gotten into another decent TS on such short notice and the food was good.
Just make sure if you are on dining plan, don't book for the last night
