So yes, I think the Canadian system is extremely stupid and flawed.
Your participation is voluntary.
If that is the case, TC was ought to require any flight school that want to offer the instructor rating to hire the instructor until they reach class 3
I'm pretty sure that TC do not want to be telling flying schools whom to hire.
that way flight schools are forced to hire class 4 if they wish to promote their class 2.
Again, who would do the "forcing"?
I'm guessing that flying schools hire instructors with the experience that the candidate brings to the school in mind. If the instructor is a class 4, that school can probably manage that, while that instructor progresses. During my second round as a student pilot, both of my instructors were +10,000 hour experience pilots (which is why I chose that school). One was an examiner, so I did quite a lot of training with the other instructor, so the examiner could do my ride later. I entered that training with several thousand hours PIC, so I really knew what I was expecting in an instructor. I could care less what class they were, it was their experience in flying I wanted. One was actually a so-so instructor, but he kept me safe while I learned, and allowed me to learn to my capacity - that was all I needed - I knew that if he was quiet, and his hands were on his lap, I was learning safely. Occasionally, there was a "Let me show you..." There was never an "I have control!". That cockpit calm and experience was all I needed.
On the other hand, I have flown with instructors who were like nervous squirrels in the cockpit - that does not instill confidence. Once, I was asked to fly back a school's instructor, after he dropped off the school's 150. I guess that he was not relaxed about my takeoff, as I saw his hands pass uselessly through the space where the right side control wheel would have been, had I had it installed in my plane. His hands continued awkwardly to his lap. He later reported to the CFI that I "was flying my airplane around below stall speed.". The CFI (who knew me well) just asked him: "How?"
Building experience is a challenge, every pilot has been there. If you can do it instructing, then you should. But being a pilot on the rise, with an instructor rating, is not the keys to the kingdom, you're in the queue with many other pilots seeking to build experience. Your best path to advancement is to offer something to the school which makes you stand out above the other candidates. One thing you might offer is your willingness to work within the system that everyone else has advanced with.
To answer your original question ('cause I did think about it), all the flying schools I know do hire from their graduating pilot/instructor group. But, I'm not really on that side of the industry any more, so keep trying. Just avoid telling the CFI that [you] I think the Canadian system is
extremely stupid and flawed. It doesn't sound positive.