My university (Olin College) was undergraduate-only, but your general point about good teaching being a rare skill is definitely valid. Our student body was definitely pretty high caliber both technically and in terms of explaining-things skills.
> it's probably not feasible to run core major requirements with undergraduate instructors as a steady-state
This seems to be mostly false, in the sense that many schools run huge class sizes for many core courses (cough couch Berkely) and in practice non-TA instruction in those courses could be pretty easily replaced with videos. It's not ideal, but seems to work OK.
> For an intro programming course serving all students, you really need a professional educator who is practiced at going through the slog of helping people understand for loops.
This is certainly true if you just hire some students and tell them to do their best, but I think you might be underestimating how much better intentionally-designed support resources can make the process. For example, it's reasonable to provide instruction for the instructors on how to be effective, and invest more in quality video or written content to explain technical details that a student might not be able to articulate well. In my experience, being taught by student instructors definitely also helps prepare students to teach as student instructors, in a virtuous cycle.
Many of the tools for doing this well don't exist in a cohesive form today, but to the extent that people are working to make education cheaper, this seems like a promising direction to investigate.