Whirls,
The consequences are just a scenario. But I do think that poor standards do contribute to post PPL drop out.
PPL's who are badly training, do not get essential information on even simple things like flight planning etc do not have the confidence to go beyond basic rental and as a result get bored and give up flying. An Instructor who encourages them to spread their wings AND shows them how to do it could go a long way towards improving things.
I would just like to see FI's treated as proper professionals, it might encourage more of them to take it up as a career and actually improve the sorry state of GA.