When you say a PPL FI would be lucky to recoup the cost of their training are you including all flight training (PPL, 100+ hours, ATPL's etc) or just the FI rating? At say £7000 for the FI rating and £20/hr that's 350hrs, after which it's cash positive. Admittedly not a great investment on face value but if you enjoy it and feel you've got something to offer then it seems reasonable to be cash neutral on the rating alone if working part time for 2-3 years.
Full time I'd agree there doesn't seem to be enough pay or future (due MEP/IR prerequisite experience roadblock) for anyone to consider it as a career. The issue really is the stepping stone of air taxi work etc to allow IR logged hours drying up though I do agree that people should have done the job in the real world before they start to teach it. I'd guess todays current MEP IR career instructors, having managed to build the necessary experience prior to the new rules, are in a sweet spot and good luck to them.