Do you have percentages? Given the number of players who developed their game overseas and those who pre-date the academy system or came via a different route, I wouldn't be surprised if there wasn't even a majority who came through this route let alone a vast one. England / Saxons players is another story, I see this percentage as ever increasing and tending towards 100%.
Unnecessarily harsh IMO. Players develop at different rates, today's "reject" may be tomorrow's international. Take Dave Ward - he was very close to turning his back on a career in rugby before signing a contract with Cornish Pirates. After three years developing his game in the Championship, he was picked up by Quins, became the player's player of the season and received a call up to the England squad.
It's far to simplistic to suggest that all players are either rejects or DRs. Plenty of established players have arrived from routes other than being surplus to requirements at an AP club. Rob Cook is a good example, he left Nuneaton to chance his arm at professional rugby with Cornish Pirates, a few years later, he's one of the first names on Gloucester's team sheet.
In rugby, like anything else, as you tend towards excellence, margins become finer. I would suggest that there's little if anything to chose between a Championship starter and an AP squad player in the majority of cases, be they a reject or not.
At the moment, the only Championship / N1 side who look like they could sustain AP rugby are Bristol, although I wouldn't describe them doing this as "doing an Exeter". Further down the road, I wouldn't be too shocked to see Coventry "do an Exeter", but they are now, where Exeter were in the mid to late nineties, so if the long shot comes off, it won't be for a long while yet.
I though that PRL were campaigning to do exactly that fairly recently, albeit as a carrot to get the Championship clubs to agree to various things.
I believe that the level of funding that the clubs receive at the moment is about right. Give Championship clubs more money and it will almost inevitably go on overseas "stars" and journeymen who are well past their best. If funding is kept at the current level, it's more likely that EQPs of an age to develop and go on to play at a higher level will get game time. The only problem is if budgets are so tight that players of great potential are lost to the game.