For me the biggest advantage to former Military or LE instructors is that their prior service is somewhat of a guarantee of their abilities. If a guy has served with a particular unit, then it tells me that he has mastered these skills. Now can he teach? That is another matter all together. I will also say as someone who learned my "serious shooting" in a military setting from instructors from such units, I actually prefer the training atmosphere and I feel comfortable in it. For others, it may be a turn off.
With civilian background shooters, there is a little more ambiguity to there credentials. RobS may very well be as good of a shooter SeanM is and may actually be a better teacher, but there is no way for the average wana learn to shoot Joe to know this, so they will go with the man with certifiable Ninja skills over the one without.
I think once a shooter has evolved out of the basics into their own path of ballistic enlightenment, then they are usually smart enough to know that each instructor out there has certain skill sets to offer and they can choose the instructors that best offer them what they want. The corollary is that for the shooter who hasn't evolved to this point yet, then they are probably well served by quality instructors regardless of background.
Of course all of this also negates the "entertainment and recreational" aspects of going to classes.