I have overheard CPL instructors saying how "so and so" would never make it as an airline pilot. That particular "so and so" is now flying for a major!
It is often uncertain at the training stage as to whether anyone will cut the mustard higher up... The deal is we train someone to the standard they need to be in order to pass their next test whatever test that may be. If it means we have to be honest when it's obviously gonna cost them more money then that too is part of the job in my opinion. I think the vast majority of instructors are ethically sound in that respect.
Every PPL student I instruct is viewed on their own merits based essentially on their goal and age. The way I gear a flying lesson would not be the same for a 17 year old airline pilot wannabe as a 65 year old fly-for-fun type who's undecided on whether he actually wants a licence yet. One thing is for certain though - I would never suggest to a young airline pilot wannabe that I don't think he's cut out for it as I have no real basis for an opinion. This standpoint has sod all to do with ethics unless one is involved with airline pilot recruitment or testing. Ethics need a foundation. In short, my view counts for nothing on that level and I'd be seriously jumped up to even suggest it to a young PPL student, even the poorest in quality, passing through my flying school.
VFE.