> since it teaches new students bad habits, like keeping their heads down and focusing on instruments.

I'm very much not an expert on this, but I thought that most of the time, at least for recreational flying, the opposite was the problem: things like running out of fuel or doing that thing where you slowly loose altitude over the ocean without realising and then crash into the water because you're not paying attention to the instruments.

My experience with flight sims is that they weren't useful, but a big part of it was that I had no skin in the game. I could always walk away from a mistake, so I got sloppy.