When I was a lowly student, and later when I got to airlines, some of the best - and worst - instructors I flew with were ex-military. Ditto with airline trainers & checkers - some great mentors, and some who were barely adequate as line donkeys (the 'screamers' etc).
No matter a pilot's background, suitability for instruction comes down to personality, knowledge, ability to impart knowledge, and natural flying ability.
But CASA is not in the business of psychoanalysis (praise be for that small mercy!), so they do their usual 'jump through ALL the hoops' BS for every case. CASA is unable to think outside their tiny square.
With the industry allegedly facing a pilot shortage, you'd think that some middle ground could be found in the way CASA recognises prior experience in the intersts of creating a fast track to more advanced instructor ratings and approvals. There will always be a trickle of hour-building Grade 3's coming through the pipeline, so that is probably not a problem for industry. The problem lies in the hours it takes a Grade 3 to move up the instructor food-chain, by which time many move on.
For someone with military or airline instructional experience, a short PMI course tailored to ab-initio training, a few hours in the relevant aircraft type, some self -study to bone up on briefings for the entire PPL/CPL syllabus should not be too much to ask, and not too expensive. It shouldn't need a six week Grade 3 course.
Then require a pass in a practical test for issue of Grade 2.
Expecting a Grade 1 with all the 'fruit' from the get-go with no prior exposure to the GA way of doing things could end in failure for the candidate, or disappointment for students.
Whatever further qualifications are desired should be subject only to proof of prior relevant experience (credits for instrument, multi etc instruction) and a practical test - same as any other instructor moving up. Exemptions in time required as Grade 2 before applying for Grade 1 could be appropriate.
If people baulk at being tested to prove competence, they have no place in aviation.