There are a few assumptions implicit in your question, which I'd like to pick apart first. These are:

1. Confucianism viewed the individual as 'worthless'
2. Confucianism was so dominant and repressive that other schools of thought could only survive in remote 'holdouts'
3. Non-Confucian or Anti-Confucian countercultures would necessarily be more 'individualistic' than mainstream Confucianism

Unfortunately, all three of these assumptions are incorrect.

Regarding Confucian views on the individual, you may be interested in this thread where I compared Confucius with Plato. The tl;dr is that, while Confucian thought certainly stresses hierarchy and duty, it ultimately defines society as a web of person-to-person social relationships between individuals who all can, and should, pursue moral and intellectual growth. One of the great contributions of the Analects to Chinese thought was the notion that the poor, low-born, and even barbarian were just as capable of moral and intellectual attainment as the hereditary elite. This did sit somewhat uneasily with Confucius' idealistic views on the traditional Zhou feudal order, and this internal conflict between egalitarian and elitist principles drove many of the debates within Confucianism over the centuries.

The caveat here is that 'Confucian individualism' still values the well-being of family and society over the fulfillment of individual desires, and defines a 'good person' as basically someone who is of service to others and has a positive moral influence on them. But this is not at all unique to Confucian or Chinese thought; Aristotle likewise argued that the best and most fulfilling life was that of a good citizen. Your narrower definition of individualism owes more to Early Modern thinkers like Hobbes and Rousseau than to any classical or medieval school of thought.

Regarding the dominance of Confucianism; even at the peak of Confucian power and social influence from the Song period onwards, non-Confucian thought was not effectively marginalized. Buddhism and Daoism, each with their own values system, monastic tradition, and community of lay believers, were never displaced and occasionally got the upper hand over Confucianism, as in the Northern and Southern Dynasties period and much of the Tang period. Neo-Confucianism or Lixue developed largely in response to the serious philosophical and ideological challenges posed by Buddhism and Daoism. Smaller religious or philosophical communities- Muslims, Christians and so on- likewise operated openly for most of Chinese history, often in the major cities which were officially the seat of Confucian power. There were also any number of people living itinerant lifestyles well outside of the idealized mainstream society; caravanners, magicians, actors, bandits and the like. So while those seeking to live an ascetic life in a marsh or on a mountaintop certainly had the option to, even in the conservative Neo-Confucian societies of the Song or Ming there was no need to go into hiding to live a 'non-Confucian' life.

Lastly, the opposition of a 'collectivist mainstream' and an 'individualist underground' in China. Again, the definition of 'individualism' you cite is basically a modern one, rooted in the idea that human beings are individuals first and foremost, and that 'society' is to some degree artificial. In contrast, most premodern schools of thought accepted community life as humankind's natural state and did not quite share this preoccupation with the tension between individual desires and the demands of society. All this goes to say that non-Confucian or even anti-Confucian thinkers in China or other Sinosphere countries did not generally oppose Confucianism on 'individualistic' grounds. Alternative religious identities- Daoist, Buddhist, Muslim- did not stress a higher degree of individualism per se, but rather a different kind of belonging in an alternative community.