Money for old Rope?
Pringle
What I think you are missing is that the situation that you describe as now has only truly been the situation for a little over the last ten years or later when the JAR's became effective. Before then from around 1990 all instructors were PPL/FI. It is to be reminded that the system then was AFI and with much more experience than now, FI.
It is generally agreed by those with experience of both systems that instructing standards have not improved and many claim the instructing standards are, today, lower than before. The reasons given for a supposed drop in standards is the lack of experience of many of todays FI/FI(r).
The background knowledge of todays FIs is much greater than before but there appears to be a poor standard of how to impart it. Perhaps due in large part to the 'pub quiz' nature of the ATPL/CPL study and exam system. I certainly felt that was true when I did them pre JAA.
I don't think it is necessarily a loss of flying experience that is so much missing in flying club instruction, it is more a lack of maturity and experience of life in general. The instructing world being dominated by very young unreliable people on their way to the airlines.