Is it a Ponzi scheme? Ultimately, yes, just like professional sports is a Ponzi scheme. There are only a few who make it to the show, out of a large number who play in college, semi-pro, etc.
There will be a number of folks who earn a commercial license but who won't ever really make a living from flying. That's just life, there is a lot of leftover slag after making iron. The process of producing pilots is inherently wasteful, the separating of wheat from chaff, the separating of capable pilots from those who paid $50,000 for a nice wall decoration. I do believe the majority who earn a commercial license will make their living flying, but I don't believe it is a "vast majority".
I think it will be a problem for new CFIs to find a job in a year or so. New CFIs will need a few years to earn their 1000+ hours, and to earn those hours each CFI will need to train more than five students. Then one of those trained students will replace the CFI. Are there enough other time-building jobs to absorb the other four students? I don't believe so, but I think the cream will rise to the top. Good students who become good CFIs will get the available CFI jobs. Many of them will have John Burke's determination. Many others won't, and will find other paths to success outside of aviation. Such is life.