It is about both. You are being very naive if you think that flight training can survive with the endless rise in costs. If training organisations can bring the cost of flying down by using PPL FI's then we might attract more people in and retain people for longer.
I also still think that an experianced PPL FI brings more to the table than an inexperianced hours builder regardless of the number of exams they have sat in the same way as a career instructor does. Also bear in mind that the majority of career instructors are ex PPL FI's that got a BCP through greandfather rights.
The number of exams you have sat counts for nothing it is the experiance you bring to the table. I have sat all of these wonderfull exams and gained high 90 passes in them all yet if I sat them tommorrow I bet I would not pass them again and anyone who tells me they would is either a liar or an ego maniac. I have no desire to drive a chav transporter but I do like part time teaching, tail wheel, Instrument rating etc. and I certainly don't need free hours. This means that I may be able to give a better level of consistancy.
Also again as beagle points out the standard of the vast majority of wannabee airlines pilots means they will never get a job. It never ceases to amaze me the number of people who put themselves through the mill to fill the dream of being an airline pilot yet will never have the skills to do the. Airlines are not interested in the hours you have in the RHS of a spam can they are interested in your management skills. My friend is flying Dash 8 for BA and has just passed the 500hrs TT as a PILOT. BA don't want hours they want CRM etc.
Airline pilots should be apptitude tested and sponsored this would stop people deluding themselves!