I agree with this. People will always pay for quality. I think the car example is great. Sure I can find a ton of $75 pastels, but most of them are already browning out and fading color, even as hatchlings and have dull colors. In a year or two, those won't look much different than normals.
I do think KS negatively affects the market, however, i do think the market was over inflated to begin with. Plus with more people breeding means there is going to be more stock, which means prices will fall. I do think that to some extent this causes a deflationary effect in which people hold out on buying waiting for the price to fall. Thus when animals aren't moving, one lowers the prices, and the cycle continues.
But prices will fall, and they'll continue to fall even w/o KS. Its just a fact of life. We can sit around and complain about it and cry over spilt milk, or we can just adapt, and focus on producing the highest quality animals and to plan long run taking into account falling prices.