It's hard to have artistic competition from a musical standpoint when most good works are overshadowed by the okay ones with flash videos to accompany them. That aside, it honestly seems that you can pretty much throw whatever you want out there, whether it's good or not, and people will eat it up if it has the Touhou name on it. A number of doujin circles, even the ones that are established and have evolved as artists, still tend to release mediocre works and will still, no doubt, profit from it, just because Touhou is involved somehow. There are dozens upon dozens of circles involved in the "competition", and I'm really not seeing an increase in the overall quality, especially not while groups like Innocent Key are allowed to exist, remain terrible, and still keep one of the bigger circle fanbases.
"Good" is a relative term. Maybe you think Innocent Key's songs are terrible, but I'm sure there are a large number of people who genuinely adore them.
Really, the whole discussion of "terrible Touhou arrange artists are only still allowed to exist is because they do stuff related to Touhou" is faulty in itself. There are plenty of Touhou arranges that the majority says are horrible, but does that stop those groups from making music? Generally not. Sure, good reception is a bonus, but I'm certain that most of these doujin artists are doing what they do because they
want to do it. Innocent Key wants to make the songs they do. IOSYS wants to make the songs they do. Black Night Funeral and Demetori want to make the songs they do. They're taking a page from ZUN's book and just doing it because they enjoy it, horrible or not. And I don't see why they shouldn't be allowed to make what they want to make, even if it genuinely sucks.
And if your only real problem is with fans of those groups making them popular and overshadowing the works of other artists, well, that's pretty much the same thing as hating Touhou because you hate the fans. A ridiculous reason, essentially.
