Exactly right, SkiMangoJazz!
For an instructor, communication is everything.
He (or she) needs to be able to perceive a problem, or understand the student's questions, and then must be able to communicate the answer, either in words, or by demonstrating.
It's all about communications, both out-going and in-coming.
I think the instructor (or coach) doesn't even need to ski as well as his student, as long as he can still get the student or athlete to progress, who cares about the coach's ability to ski?
That's why some people can teach and some can't.