Sorry Pringle but I think you are wrong. I don't think for a start you are going to get many 200hr PPL's doing the Instructor course unlike the 200hr hours builders who just see it as a stepping stone to 'better' things. I think from the work that I have done on this that we are going to get the higher hour PPL's who want to put something back into aviation, the retired etc.
As far as knowledge is concerned again I think you are wrong, the requirement to hold CPL level knowledge is not being removed, just the requirement to hold a CPL. The FI and CRI courses weed out those who do not have the knowledge to back up what they are trying to do.
I have been around long enough to remember when Instruction was done by PPL FI's and believe me the standards were just as good if not better a lot of the time.