Say Again Slowly,
You say that if you were a student taking a ppl you would want the "most qualified individual" as an instructor.
But who is the most qualified - a new FI(R) or whatever it's called now with 50 hrs instructional experience, a frozen ATPL and a copy of "Handling the big jets" in his flight case, or a guy (or gal) flying on a restricted BCPL/CPL with thousands of hours of instructional experience on light aircraft ?
Ability to instruct is primarily to do with experience - not just total number of flying hours but also instructing hours, time spent teaching and trying to find ways of solving students problems.
As far as an instructors view of aviation being limited - if we are talking about ppl instructing then I would suggest that the average ppl student isn't interested in an instructors experience of approved courses or instrument ratings. He is more likely to want to know (after obtaining his license) about IMC ratings, aerobatics, grass strips, how to join a group, how to fly VFR in France etc etc. I would suggest that someone who has been involved in grass roots aviation at club level is far better equipped to teach that than someone who has 200 hrs, passed all the atpl exams and is trying to pay off a 40k bank loan. And whether that instructor has in his pocket an ATPL, CPL, BCPL or NPPL is absolutely irrelevant.
Anyone who has any doubts about this should pay a visit to their nearest microlight club/school on a good flying day and see how the system works.