Good 'ol domestic piano playing is like you saw in Bach and Mozart's time - or even Mendelsohn. Yes, my guess is among some groups the caliber of playing is very high - I've not heard that in the interpretation though.
Interpretation can grow with time, especially in children. They don't have the maturity to give a musical rendition of whatever standard repertoire anyway, so it is relatively useless to work too deliberately for too long on such things with them.
More important for them, as I see it, is to learn the craft of piano playing, so that when the time of maturity comes, they'll be ready to use the skills they have acquired. When speaking about how hard it is to "motivate" students, by the way, technique/mechanics (anything that flows like oil) is very much in the field of their interest if it is taught in a competent way. Of course, one could say that there are so many "lento's" and "adagio's" in the piano literature that one doesn't have to learn an "allegro" or a "presto", but that sounds like a very sad future for piano entertainment at home.
The tragedy of the renowned Western musical institutions nowadays is that they are more and more populated solely by Asian pianists, and the "locals" are mostly rejected because they simply can't fulfil the TECHNICAL requirements for studying there. As the myth goes, "the Asians work very hard, and the locals don't work hard enough". Don't you think that's sad, especially when the latter is not necessarily true?
Raising the level at which the craft is taught is not useless. Even if all those people who learn it don't become concert pianists (how could they?), they will at least be able to pass on their high-level skills to the next generation, and hopefully, they will have the honor of getting at least one true talent in their hands. I, for myself, am grateful that I have learned how to play at a reasonably high level. This means that, even if I don't become a pro, my old days will be filled with music that can truly bring joy to myself and to others.
