The 500 hours commercial experience requirement for CFI of a commercial school was only brought in as a schedule to the AOC after CAO 80 went by the wayside, about 7 years ago? Long after I became one anyway. The minimum requirements were to my mind arbitrary numbers (I certainly don't recall "industry" being consulted) and had they not allowed "grandfather" rights to existing CFIs, a lot of us would have had to be demoted, or, if we felt so inclined, go poling round the bungle bungles or something for a coupla years to build "coomercial not instructing" hours to get our jobs back. Clearly ridiculous.
In my experience, of the CFIs I worked for in my years before becoming one myself, the best ones who upheld the highest standards were the career instructors who had worked their way steadily up the instructing ladder, some of the worst were the ones with the "war stories" which were often about all the times they'd fooled CASA and/or got away with doing things that were illegal/stupid/unsafe, thus setting an appalling example to their staff and students.
The lowering of standards is IMHO the fact that most of the big schools can do all thier testing "in house" and with each generation, the common denominator gets lower and lower.