If you have a Kindle, you can get the e-book "Piano Mastery" for free. It's a collection of talks with the great pianists and piano teachers of 1913. The interviews originally appeared in the magazine Musical America. The material is sort of repetitious, but the price is right. 
What struck me in the interviews was 1) they reflect a very high level of public and popular interest in the piano and 2) this public was very open to, even enthusiastic about, contemporary music. There are stories of people from small towns travelling far (in horse-carts?!?) to hear recitals, and all the fans waiting impatiently for the new Rachmaninof or Paderewski piece. I don't think this happens so much anymore.
Thanks for mentioning this book I will certainly have to find it. I still think that there is some kind of public interest in piano playing and in fact I think today it is easier to make a living from music than back then. Holding any sort of concert these days however requires a lot of good marketing, you can be the best pianist in the world but if you don't have the complete package (that is a business musician as well as the artistic musician) you pretty much can't get anywhere.
I think the piano stars have always fallen behind the singing stars no matter what era you lived in. Today we notice it even more obviously but I think that most people would be interested in hearing a good pianist rather than a good rock band. The good rock band is even harder musical life than the good pianist. People have such a strong preference for music these days you just can't cut it unless you write something people didn't know they needed. But pianists are like masters of an old art, and those who can package their concerts to suit their audience will go far these days.
I thought the idea of being one's own watchdog went further than you stated above, that the student should be trained early on the be sufficiently critical of their technique, and to recognize when they were playing correctly or incorrectly, and not depend on their teacher to point out every little thing. to me this is a critical skill.
I agree with your extension on the idea of being a watchdog wholeheartedly, I think they mentioned this by saying playing with your "Brain" not just the body. It seems that the early beginners where taught to read music and not look at the hands very early on which to me seems a very tough way to begin piano, I thought that highlighting this old methodology was however an interesting idea. I think that sheet music in those days where a lot harder to get your hands on, this book I have for instance cost $1.50 which in 1900's probably is around $80 today. So sheet music was a luxury and expensive probably a reason why beginners had to read straight away.
I also agree with starlady that the general public interest in the piano has waned since the early 20th century. it used to be a near-requirement that a middle class home had a piano, and I would hazard a guess that fewer than 10% of houses in America today have an instrument (but I can't say i have an exact statistic). ask yourself, when you go to a friend's house for a dinner party, does someone spontaneously take up the piano to provide a few moments entertainment between courses?
I know in my family we do play the piano at parties held at our home all the time

But gone are the days of people spending long hours drinking and singing songs while the pianist accompanies them all. Now we just put on the CD and it sounds like a live band is in your own home and you can even have the best singers in the world sing while you dine. The gramophone just didn't have the same feel huh?

Nowadays however I do notice that A LOT more people are taking piano lessons than in the past. That is because we live in the Information Age and specialist knowledge is valuable. But you wont be able to pack a stadium with 20,000 people cheering you on while you play a piano solo concert like the famous singers draw. That is not to say that it wouldn't be possible, you would have to have the right idea though. No one yet has regularly held piano solo concerts which draw such a grand audience.
and finally, I'd be a lot more interested in contemporary classical music if it sounded at all like the music of rachmaninoff or his contemporaries. I'm sure others would as well.
I agree and I think part of the fact lies in how great composers think. I believe that the composers of the later 20th and now the 21st century could indeed write like the old masters but choose not to. Most composers like to have their own voice, explore and develop ideas, thus they would never like to sound like any of the old greats because that had already been done. It would be a good challenge to see if composers of today could actually mimic the greats of the 17th, 18th, 19th and early 20th century keyboard writers I have heard some modern examples on radio but they never really are memorable enough!
Didn't Bernhard, the 'Great One', who everyone is always referencing on this forum, teach daily lessons? I have always been intrigued by the idea and have recently begun teaching a neighbor's son on a daily basis. It never seemed practical with my other students, but when this neighbor asked me to teach her 7-year-old, I asked her if I could try my experiment with him. It's interesting that they only suggest it for the first 3 months, though. My guess as to the reason for the daily lessons with a teacher is to start the beginning student with good habits and training in the proper way to practice, and perhaps 3 months is sufficient time to establish a good routine. It is then probably assumed that the student will continue on in the way he was trained.
I would be greatly interested if you post a thread relaying your experience with this type of lesson and how the student benefits differently from this as opposed to the general weekly lessons. I was considering daily lessons would have to target different musical ideas every time, it would not be like weekly lessons where you have the overall view of their work and aim to improve multiple issues at once, perhaps with daily lessons we would focus on things like;
1) technical exercises and practical theory
2) Musical expression
3) Fingering and technique
4) Repertoire selection, time management and goal setting
It would be also good to simply allow the student to practice on their own in the teachers presence and interjection by the teacher only happens if something is going wrong without noticeable movement in the correct direction. Sometimes I let my weekly students show me how they practice, it sometimes reveals a huge amount, some students are very good at following instructions but when left to their own devices without guidance they are very insecure and sometimes simply have no idea where to start.
If I remember correctly, you have mentioned before that you teach beginning students their pieces by rote, and I do the same. I initially began with a Suzuki teacher, so that's how I learned, and I know from experience that it is a good way to do it - for many reasons. But, I don't delay the teaching of reading for very long.
Yes, I do not get early beginners to read normal sheet music simply because they need that experience of pieces first, the coordination is so important to work out first I found. But you are right in warning you shouldn't leave it for too long. Often with students of mine I will write passages of sheet music on a piece of paper with just letters which go up and down like sheet music, but I do not define note length quality that is done by ear. I like this way because it gets them to start using their brain to read the logic of sheet music but not actually have to read music notes to gain the early basics of reading.
I had about 5 years of playing with about 50 or so easier pieces under my belt before I started to learn to read music, but I found it an incredibly difficult process which I pretty much abandoned because I learned predominantly through muscular and sound memory. It was not until I was in my late teens that I decided that I needed to improve my reading and started recreating my main method of learning music. This prompts me that developing correct learning habits is very important, that is getting to sight reading as soon as possible and getting to understand how sight reading effects our memory as a whole.
However my early bias to muscular and sound memory certainly has effected me in present time for the better as well so maybe there really isn't a right or wrong way. When I was younger I would slowly learn a phrase but as soon as I knew the notes I never had to read again. I liked that power, that I only had to read a passage once and then I had it. Of course I had to keep practicing until the note errors and fingering errors vanished but I didn't need the sheet music to guide me once I had read it from it the first time. Now however as my reading improved that effort becomes impossible, I can't simply sight read a piece one time and then throw away the sheets and play it again, there is too much information to digest, however I found that it requires multiple sight reading attempts for the memory to automatically occur. When studying now I never look at my hands while the sheet music is up, you learn the notes then you can forget them. But that forgetting process stems deep within my muscular and sound memory, the conscious memory of sighting the music seems separated (in that you sight read without forcing the memory) but together (eventually the muscular and sound memory can't be ignored) . That is from existing in conscious memory efforts for long enough the muscular and sound begin to attach themselves to it without you really knowing, but then you are left with parts of the score that are not automatically being learned so then you know which parts to focus on.
.... sightreading skills are always going to be a couple of levels below what one can play by spending time on a piece, I feel that it is best to separate reading and performance.
An extremely important point and something which I hold very close to me while teaching as well.
.... anything else interesting in that book, please share again.
Certainly.
The importance of a proper position at the piano should be thoroughly impressed upon the pupil at the outset. The stool or bench should stand quite firm with no tendency to rock and of sufficient high to bring the elbows a little below the level of the upper surface of the white keys when the arms hang naturally at the sides.
Attention called to the alternate groups of two and three black keys, thus locating the C's and F's, will soon enable the pupil to name the white keys without hesitation.
Assuming the pupil to be a child, no further mental labor, other than that above suggested should be required for a first lesson but that of holding the right hand in a proper position and the use of the fingers in playing a simple exercise dictated to the pupil. This preliminary fingering drill may be done on a silent keyboard.
Preparatory to what may be called "finger touch", i.e with no arm or wrist motion, have the pupil close the hands into fists, with considerable strength of grip and thus call attention to the constricted, cramped feeling of the wrists as something to avoid. Then, opening the hands freely, to the feeling of release and ease in the relaxed muscles, as something to maintain.
Now holing the right hand (palm down) move each finger from the knuckle joint, slowly and lightly many times in succession, naming them by their respective numbers. (image of hand with finger numbers 1,2,3,4,5 as we are all used to). This is known as "foreign fingering" and is in almost universal use to the exclusion of the so-called American, in which the thumbs are indicated by 'x" and the fingers, proper, 1,2,3,4. No doubt the American is quite as consistent as the foreign, but the fact that much music of foreign publication is used in this country renders it advisable, as a convenience to American pupils, that our own publications should conform to those of the "old country".
Facility in playing scales, or scale passages, depends largely upon proper looseness of the wrist, and curving of the fourth finger, thus affording the necessary space between the hand and the keys so that the thumb can easily and quickly pass under the hand in readiness for its next position. The wrists may turn out slightly, but not so far as to cause the projection of the elbows. Beware of this too common fault. The proper position of the fingers is assured if only the fourth (which seems to control the others in this respect) is properly curved.