While I agree with your post for the most part, I think
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They have grad students teaching classes, for the love of god! 50 years ago, only PhD's would ever lecture, and the class sizes were small (less than 40). The professor knew your name, and actually pushed you.
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is a positive sign of progress rather than a regression.
Graduate students are usually only teaching for two reasons: (a) they just need teaching credit for their EDU degree, or (b) they like helping people learn.
Many of my professors make it clear that they're only teaching because nowhere else would pay the extraordinary salary that a PHD requires. They believe their job is to teach, not for you to learn. While there are notable exeptions, the rule of thumb for me is that the longer someone is a teacher (beyond 10 years) the less effective they become at truly teaching. If you've been a teacher for a long enough, you can forget how to learn -- after all, their job has become teaching, not learning.
I love grad students because they share common experiences of my generation and can relate applicable topics to contemporary ideals. They're learning themselves, so they know how difficult it can be and they know what helps THEM learn.
Just my 2cents.
EDIT: PLUS -- Your odds of getting an smokin' instructor when they're a grad student are easily double those of getting an attractive
tenured instructor.