Is this a case of taking Democracy to an unfortunate extreme? Going from the ideal of "All men are created equal" to "Everybody must be treated equally no matter their ability or talent."

Courteous audiences listen even when the performer is lousy, and applaud out of habit or a feeling of social obligation. Discoureous audiences ignore good performers as often as bad ones. So you can't count on audience feedback to tell a performer when he/she needs to improve.

The stage is getting kinda like the Internet - anybody and everybody can and does put their work out there and expects to be praised because they are "contributing content". There are no professional editors to filter the garbage from the good.

There... I just "contributed". Aren't you proud of me? Where are my applause?

(on a little less sarcastic note...)
If I were running a venue where musicians performed for a paying audience, (or even a pub where they're paying for drinks and "atmosphere") I would want to review the quality of an act before I booked them. An Open Mic night might be different - there, the audience probably ought to expect a wide range of ability. But "headliners", "opening acts", and "guest performers" would be checked out ahead of time. Not saying that would prevent the occasional lousy performance, but it should separate out most of the chaff from the wheat. And a "session" could be open to all comers, but I'd hope for and encourage a core of competent players to keep the general quality at an "acceptable" level.