I think JAR OPS defines contingency. It's exactly as you describe.
The key element here is that contingency fuel is there in case something UNFORSEEN happens en route (different route, level etc).
Now if something is forseen, the CAA interpretation of likely holding in the London TMA for example, you should not plan to use contingency fuel for that purpose.
The decision to go below min fuel required to approach, go round and divert with 30 mins hold (Company Min Reserve or similar) is a difficult one but, of course, can happen.
Don't forget, there's no guarantee that your alternate will not close suddenly as well - but there are only so many contingencies you can reasonably plan for.
In the end, that's what we're paid for.