"What are we supposed to do?"
A couple of guys here have cottoned onto it. Target the employers that are most likely to take you. Also, seek out the smaller operators and actually pay them a visit. No time? Too busy? ok, stay where you are and wail about no prospects.
If it's become screamingly obvious that "Jet operator A" or "charter airline B" won't look at you it's time to change tack. Seek out the smaller operators, whether they be turboprop airlines or smaller biz jet operators. (who by the way are flat out!!)
If you're not prepared to shift a couple of hundred miles for a decent job (ie better than the one you're in) then I would suggest that this is not the career for you. Writing letters to the smaller operators may work but most likely what will work is a face at the door.
Tactics and strategy (plus a good scan) is what's required. You folks do know that an airline is only allowed a certain percentage of inexperienced pilots? So, if an airline is getting bulk of their low houred pilots from CTC and the like do you think that's your best target? By all means have a go but I think you know what the chances are. Does the airline traditionally look at instructors favourably? There are a couple of well regarded piston charter operators that are a great source for pilots.
Look at the new emerging markets. Right now I can tell you that just about every one who's got a bizjet is flat out in the UK. That's an area of aviation that is growing.
easyJet have lowered their requirements, Virgin Atlantic's still hiring, Ryanair have changed their requirements, Netjets Europe need a min of 150 pilots next year. You're probably thinking. Great... they all need X hours. Yes they do, but they need to get the pilots from somewhere which means vacancies in the less well known and/or turboprop companies.
The employment scene hasn't been this good since prior to 2001!! The next slump (which will come, just as night follows day) is estimated to be about 4 years away. (Industry is cyclical. 7-10 year cycle)