BP
Your points are correct. There are many facets to being a good pilot, however my experience is that it is rather rare to see a pilot with the skills to fly my ASI covered test circuit correctly and yet be a bad pilot everywhere else.
It takes personal discipline to fly a proper circuit at the correct height, with square corners, with a stable on speed approach etc etc. Poor pilots don't either have or want to have that kind of discipline as it is antithetical to their entire style of flying.
Bob upanddown
This of course is meant as a dual exercise as I thought was obvious from my post. Obviously the instructor skills have to be up to the exercise. I will periodically remove the cover during the exercise after asking the student what they think the speed is and providing my estimate. I find it is unusual if I am wrong by more than 2 knots. The best part is the student will quickly be just as close after a bit of practice.
If you are an instructor and uncomfortable doing this exercise I would respectfully suggest you should work at building your personal flying skills as this exercise is the kind of brute stick and rudder skills essential to effective instructing.