ginaliam, thanks for that thoughtful post and you are right, there are two very different areas to consider here, one is the oft mentioned lack of high end ski skills by many instructors at ski areas and the other is high level instruction by well qualified instructors.
When whoever runs the ski school (the area I ski in the school is run by a committee of six, non with an instructor background, more from the management business side) interview for instructors the criteria that need to be met is who is available when, college kids can instruct in the evenings mostly, retired folks can instruct during the day, etc. Skiing performance is secondary, if that, and explained away with trainers running clinics so instructors can learn on the job.
This, unfortunately lets folks riding the lift see many instructors in uniform skiing at a lower level than they expect.
I know Bob and Harald are booked for the season but I have seen Bob teach lower intermediates on the mountain and he relishes to get them sooner than later in their skiing development. Unfortunately for the two competing systems discussed here, one is available everywhere and the other simply isn't, at least not wide spread. Maybe that will change someday, but my suspicion is that they will gravitate and in the end be much the same, some of that is even evident today.
Lastly, I would like to express something that is seldom discussed on these boards and that is the incompetent learner. Almost every group lesson has some, they just don't get it while everyone else in class does and the consequence is that the instructor spends an undue amount of time with them trying to bring them up to speed penalizing the other students in the process. It is not easy to tell an enthusiastic but unable learner to get their boots aligned, take only private lessons, buy decent equipment, etc. and then see them not progressing.
And if you think that doesn't tear the heart out of the instructor who does the mia culpa and has self doubt you should experience it sometime.
....Ott