It's pretty tacky in most circumstances, in my opinion. I think of pianists and teachers as much more than piano monkeys who are supposed to be capable of doing tricks at somebody else's command.
Here are some essentials in finding a good teacher, in my opinion:
1. Deep love for music.
2. Deep love for teaching.
3. Ability to empathize with student (even if it's a learned empathy).
4. Willingness to take on student's challenges as her/his own.
5. Attentiveness.
6. Ability to see through a student's eyes, and then help to solve a problem from seeing through the student's eyes as well as her/his own experience.
7. Knowing concepts inside and out, and/or still having a desire and willingness to learn.
There are more, but those above are irreplaceable and can be obvious immediately. There are lots of stuffed shirts out there, and it is not an accomplishment on a teacher's part to be or end up being (or act as though they are) just another average Joe who doesn't really care about the other person in the room, or doesn't really care about music - because absolutely anybody -anybody- (anybody) even non-pianists and non-musicians, anybody under the sun, any creature great or small, can do that. There are no -zero- education, Degrees, intelligence, wisdom, or any amount of experience necessary for that. And there is not even the slightest hint of lack in the world of those average Joes.
Also, depending upon the circumstances, a teacher is most likely not where they are if they have never proved they have a highly proficient musical and instrumental understanding and can play. For one example, although there can be a lot of politics involved, a University professor has already gone through an interview/audition process, which almost certainly included formal playing of some sort in front of other professors and the student body.
There are also numerous reasons a knowledgeable pianist can be out of physical and formal practice but have a lot to offer as a teacher. Funnily enough, teaching *a lot* can be one of those reasons.
At the same time, two of my greatest musical influences were my own teachers who played in my lessons for me and with me, whose recordings I listened to, and whose concerts I made the point to attend whenever possible. And it is my wish as a teacher to be able to continue playing for my own students. But, it's deeper than "So, can you play or not?"