While I don't much care for the generalizations, Gou's got a pretty good point: it's easy to laugh at Steve Spry, because it makes us feel secure that we're so very, very different.
The same thing seems to happen on a lot of the forums and magazines I've looked at: the really obvious nutcakes, fakes, charlatans and slimeballs are objects of fascination partly because they offer alibis. Everybody can criticize what sucks in their martial arts practice (pretense and swaggering, for example), or kenpo (endless self-promotion by some), or Mr. Parker's actions (promoting Elvis to what was it? seventh? eighth? giving that fat thug Augusto Pinochet a black belt), without having to risk anything, because these problems only appear in somebody else.
Guys like Steve Spry, I think, are a symptom of what's wrong with the martial arts. John Bishop also has a point about the fact that this stuff pretty much always was wrong, but I also think it's a problem with the modern world and America in particular--land of the fee, don't you know. I mean, I train out here in California, and in a very funny book of fantasy Robert W. Smith remarked that, "California is to real martial arts as garlic is to vampires."
I don't know how you solve the problem. I'm pretty sure that it's inevitable, in capitalist societies, but a) capitalism isn't going anywhere any time soon, and b) feudal societies foster their own types of corruption. In many ways, the crappy politics and behaviour that's sometimes all too visible in American kenpo can be broken down into either a) celebrations of money-making, b) fantasies of return to some mythical, past happyland.
Sometimes, I read and hear calls for unity in kenpo, which supposedly would solve all these problems. Oh, hell no. I've met about the best people I've ever met in the art---and I've also met about the biggest collection of self-promoting fakes, fatheads, punks, bullies, fools, slobs, boneheads, and insecure power junkies I've ever seen. (Outside of colleges and universities, which is where I work, that is.) And it has been my general experience that it is not always the nice guys and gals who end up in charge of committees, governing bodies, etc. With a lot of startling exceptions (I just met some more exceptions, among the administrators who're working for Frank Trejo's upcoming tournament in Long Beach) it's the Steve Sprys of the world.
It does seem possible to make a living, establish a reputation, get students taught decently, and avoid being a total--well, you fill in the blank. My own head-of school (Larry Tatum) manages pretty well, as far as I've been able to see over the last ten years or so.
But it's a good point. All the easier to laugh at the guys who exemplify our own worst characteristics. That way, we don't have to look at what we're up to.