That a beginner or a low level player can become recognized as an instructor is, IMHO, a flaw in the system. You need to know how to perform the activity you are attempting to teach. A guitar school would NEVER hire someone who can't smoothly transition between chords or play basic rythms and leads.
Of course theory and strategy do not need to come from someone who is an accomplished player, hence the gentlemen who taught Nick Varner. However when it comes to teaching beginners and developing players, you need to have the ability to demonstrate IMO. As I have mentioned before, people learn in different ways and a good teacher should be able to adapt.
Outside of demonstrative ability, a more accomplished player will have experience which can benefit the student. A beginner instructor is like the history teacher in High School who taught directly from the text book, because they were still learning the subject too. On the flip side there are the teachers that have studied history and can provide all sorts of anecdotes and useful information that compliment the text book.
If this person has a passion for the game, then I admire that. But I think that passion should turned to learning how to play, THEN to teaching. When I was a C player I thought I knew a lot about the game, as I had read quite a few books and knew all the basic information about the fundamentals. Years later I realize I was very wrong.