Maybe I can jump back in again...
I think we're all reconciling in our own ways the sad truth that live music is just not very important to the public at large. Maybe we can agree that whatever it used to be, it was what it was a generation or two before any of us on this blog (I don't know for sure but I doubt the work available in the 70's and 80's could hold a candle to the constant need for dance bands in the 40's and 50's) Maybe I can try to explain my distinction between jazz education and being a professional musician in this context.
In my comment I disagreed with the assertion that the jazz music business is in peril as a result of numbers of students graduating from university jazz programs. I guess it is mostly because I don't really view university and the academic music streams as a form of trade school. As another commentator pointed out God help the student who'll try to pay off a degree at Berklee with jazz music as a career choice. At McGill the overwhelming majority of my students, as you've already pointed out, will dable in music professionally before moving on to pursue other more lucrative endeavors. And we both agree that this is a good thing. It's good because they will go on to make up an informed consumer of art and hopefully good music. I don't really feel threatened by their short presence in the "job market" I even encourage them to live the dream as long as possible. Most of the gigs my students play are not professional and I doubt that I'd lose any of my work to them (at least not for a couple of years...I've got to keep practising just in case!) If anything I get a lot of inspiration from hearing what younger players are coming up with as a result of their influences. Here's where perhaps another distinction is useful: Being an artist is not the same as being a success in the music business.
Being an artist requires intense mentoring, participation in a community of like minded musicians, and a lifetime of work mastering the technical aspects of one's instrument and one's own musical language. Success in the music biz requires one to have skills relevant to the needs of contemporary society. When people used to dance to music, they depended on musicians and live music in a way that they do not today. When people stopped dancing to jazz (whether the music changed or the public's entertainment needs changed is still up for debate) then live music began its steady decline. Some "artists" are a success in the biz (Mehldau for example) but I can't really explain why. I also know personally of several world-class musicians who are hard-pressed to earn the money they deserve and must supplement their income with teaching. Conversely I think we could all name a few mediocre players who are absolutely striking it rich in the biz. However as a teacher at the university level I would never steer anyone away from their dreams but rather I let life just kind of work itself out in this regard. It takes an enormous amount of dedication to make a go of it and if a person has that dedication they will do it anyways regardless of what I tell them.
So ultimately I don't really think it's possible to teach this dedication. And I believe that dedication is the key to becoming an artist. So in a way I don't even think it's possible to really "teach" artistry. I think the closest I could come would be to tell students that if they want to work they should start thinking about becoming team players. For me that meant learning how to accompany as well as I could (let's face it, it's what a pianist does %90 of the time to pay the bills) But this decision was a result of my own experience mentoring piano players in Montreal and New York and not so much a result of my classwork in composition, improv, and arranging. I am very fortunate that I can fund my own creative projects and discover my own artistic voice with the work I get as a sideman playing (ahem) sometimes less creative gigs (no offense to anyone in Montreal, I love you all! I'm just talking about the jobbing gigs)
The best argument I give students to finish their degrees are if they love learning and if they want to teach (you could potentially earn with a masters degree $100/hr teaching in a university instead of $14/h teaching at the local music store). These are valid reasons for getting a degree neither of which will guarantee any success in the field of performance. But you're right David we as teachers need to impart clearly what a student is and isn't getting as part of their university education.