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This type of thing exists in every creative art. Film, music, etc.
I'm a comic book junkie and there is a huge market of indie comics out there, especially thanks to the Internet. As a comic fan that's great because there are tons of writers and artists deemed not good enough by the established publishers to be worth publishing who are, in fact, self-publishing and making a good living. Some even end up having their indie comics optioned as films (Cowboys vs. Aliens, anyone?).
That being said, the flip-side exists as well. There are literally thousands of comics out there that are cringe worthy and, some would argue, not worth the bandwidth they take up. Like others have pointed out though, no officially sanctioned title would stop those folks from producing their work. Creative folks don't produce because it's a job, they do so because they love it, it's their passion and they will do it with or without an arbitrary title.
Telling someone they are not an official such and such may deter some, but most would tell you where you could stick that and continue about their business.
I get your point, I have bought ebooks I regretted buying. That said, I've purchased ebooks for next to nothing that were better than some of the hardbacks I have read recently. Ultimately it is up to the consumer to research their purchases (this is true in everything, not just literature) and be responsible for how they spend their money. Arbitrary lines in the sand will not diminish that fact.
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