If your intention with your music is to achieve worldwide distribution via major record stores or major labels, I agree that your album should have the kind of polish that is only achievable by a professional engineer working in a great studio with top notch equipment. There are many artists however who simply wish to have a record to sell to people at their live shows. For these artists, the expense of recording in a studio will simply never be recovered through cd sales, which means that the home studio revolution has seriously tilted things in their favour.
And it is not "the mp3 revolution" which has caused everyone to settle for low quality recordings. For many people it is more about the content than the sound quality, which is why there is such a huge market for live bootlegs of Grateful Dead concerts. This doesn't mean that you shouldn't strive for the absolute best you can reasonably achieve, it simply means that total perfection is not nearly as critical as some people would have you believe.