The reality is that the possibility of trouble if you're working illegally is increasing all the time. It's a slow process (ALL processes in China are slow processes), but it IS happening and the police in more and more cities are cracking down on English schools and foreign teachers. And the punishment isn't always the slap-on-the-wrist you describe...and even when it is, the guilty teacher is usually banned from China for a number of years. So the only mates you're going to be telling your story to for a good long while are those back home.

Meanwhile, I call Shenanigans on the claim that advising people to be legal while working in China is somehow "discrimination" against people without degrees. That's TOTAL rubbish.
First of all, that claim makes it sound like we all have some God-given right to teach in China simply because we come from an English-speaking country. Well, we DON'T.
Secondly, I don't find it unreasonable that a teacher should themselves be expected to be well-educated.
Thirdly, it's the law. Teaching without a degree (and therefore without Work and Residence Permits) is illegal...and advising people that it's OK to work illegally in China is terribly irresponsible and just downright goofy.