Competitive dancing is just like any other competitive sport: it will cause us to strain and train ourselves in order to reach an ideal and one up the people we are competing against. This causing a mental strain and some frustration but ultimately is good for us to better ourselves.
No, I do not believe that competitive dancing is hard on your mental state. It forces the person to focus on the job hand. It is, however, hard on the body physically. The body is sometime pushed to the limit, especially when a person is set on winning and the competitive spirit is really strong.