Whew! Came on this one a little late, and had to struggle just to get caught up. Despite some of the usual forum based stupidity (., memories of some kid telling you to go back to the construction site-HA!

), there is some valid discussion going on here.
I just want to touch on a few issues that jolted me a bit, starting with you, CD. I believe in the 5 hours of instruments. It is a LIFE SAVING technique only. Just look at what the standards say about it: Fly straight and level for two minutes, execute a 180 and fly for 2 minutes. Also need to recover from unusual attitude. This says to me that as an instructor, I am teaching you how to get out of an inadvertant IMC encounter, a situation that happens way more often than we would hope. To say that we should omit it at the peril of those who make the fatal VFR mistake is akin to stating that we should teach departure stalls without a safety margin for recovery; those unable to accomplish the task are better off dead.
The five hours of instruments is generally taught at the very end of the program for exactly the reason you have railed against it: VFR pilots need to be taught to fly visually. The plethora of "Flight Simmers" who now walk into a FTU make the job of instructing MORE difficult nowadays because that habit has to first be broken in order to teach it right. This may be one of the reasons the PPL is taking longer on average these days. My personal take is that the average person who pursues flight training is different than in the past. This generation of folks who have seen Top Gun

once too often is a far cry from previous generations of kids who grew up on farms driving tractors, and other assorted machinery. Flying an aircraft was more a logical extension of an already existing skill set unlike starting candidates from scratch like we do now.
N2- How much 'operational' flying experience does one need to teach someone else how to fly an aircraft for recreation? Let's face it, flying recreationally is basically what you are qualified to do with a PPL, regardless of what you actual intentions are further down the road. By the time you are a CIV, you have completed the PPL course FOUR TIMES!!

I think that is more than enough experience to teach someone the same skill. Of course, to teach a CPL, the instructor should have not only instructing experience, but operational experience as well. This is why I believe so strongly in the operation we have here, and why I think a school that is also 702/703 will produce a better entry level CPL every time over a college program. The instructors DO THAT WORK EVERY DAY.
NDB- Good call on not limiting 'advanced training' to tail-draggers only. There are lots of ways an instructor can go about gaining experience and refining their abilities, and glider flying and floats are but another two. Flying multi-IFR seems to be getting discounted here in favor of more 'traditional' flying. It all depends on the type of training you are most likely getting called upon to complete. Personally, I don't know ANY class I instructors who have spent their entire careers flying ONLY training aircraft. Not only that, but there are still a handfull of 'training' aircraft that are, well, a handfull. Ever flown a Grumman Trainer?
Before people start getting their panties in a knot, understand that I REALLY am a HUGE believer in the need to develop and teach good hands and feet; it is the aspect most lacking in newly minted PPL, CPL, and Class IV, but it doesn't take time in a Champ to develop that- it takes a concerted effort on the part of the instructor to identify and correct poor yaw control habits.
CAPGEN- Some good points, and legit concerns for the state of Genav if things should indeed transpire this way. Trouble is you are focussing too much on those pilots whose intention it is to do this for a LIVING ie.: CPL. Why should Joe (Jane) Blow PPL have to pay more for his/her training just because the competition for seats got too tough for CPL, and artificial restrictions were placed on FTUs to reduce the number of schools/instructors/candidates and Commercial pilots? Truth is, free market capitalism economics will reign, and THAT is the root of the training situation we find ourselves in now. The 'backwards' scenario postulated by Ahramin cannot happen without serious intervention on the part of the one who is 'in charge', and as a pop in one of those 'mom-and-pop' operations, I would rapidly become a thorn in the side of . as big as . is in TC.
So, what is CD supposed to do now that he is in charge? Start by being honest with your CPL candidates about the realities of this industry. Make them read the link supplied by N2 and others like it that are out there. Maybe this will dissuade some folks from pursuing this aviation thing as a career. Give back to aviation when you are done. I posted a thread on pprune asking how many experienced airline types would consider instructing when they are done. Guess what? NONE! That's right, not even if they were the owners. If you know of any who are different, please let me know.
Enough from me.