I agree, theory is very close to essential. But for me it wasn't enough, but it is for others. I wonder, though, what would happen if you bypassed theory entirely and just taught them to play by ear; that, I think, is the truely valuable skill that the theory is scaffolding for. It's not so much that they know what frets to play for a minor scale on the e string so much as they are learning what that scale sounds like and training themselves to navigate on the fret board. I think that's basically the Suzuki method is an example of a hear first, play second approach without reference to theory initially.

At any rate, I'm mostly criticizing reading-first (or worse, reading only) methods.

My problem was I extremely lazy and anxious, too terrified to make a mistake, so I just did everything as robotically, without paying attention, and as long as I played the right notes, my teacher was happy, so I was happy (in my own terrified, stay-of-execution way).