If a dog is being crossbred specifically for a working purpose, I have no problem with it. A good example of this would be Alaskan huskies bred for sled dog racing, or any of the many collie/shepherd crosses bred for working livestock.
If people need to inject traits from other breeds into their dogs in order to better do their work, that's fine. That is how most breeds were developed in the first place.
I would prefer that the proper genetic testing also occur, in order to ensure the best possible health, but many working dog owners/breeders follow the philosophy that if it isn't healthy, it won't be able to work (which, frankly, is the same philosophy that most past breeding kennels followed in the times before we had OFA, CERF exams, and blood/DNA testing available).
Most of these breeders sell very few pets - as you say, most of these dogs stay or end up in working homes, which is where they should be (especially considering that most are very high-drive). I would expect that spay/neuter be required on anything sold as a pet.
ADD: Aina - I disagree about sled dogs. Most Alaskan huskies are bred to compete in races - for many mushers in Alaska and Canada, sled dog driving is their job. Winning and placing in races is how they survive. In addition, many of these same people use their dogs to run trap lines (yes, still...cheaper and more reliable than a snowmachine) and provide dogsled rides/tours to tourists. Their dogs put food on the table.
ADD2: Personally, I think that breeding mixes simply to excel at companion events (such as flyball or agility) is no better than breeding designer mixes for market. I don't consider Flyball a "job". It is game invented by owners in order to give them something to do with their pets. Putting more dogs on this planet in order to win at a *game* seems incredibly egotistical to me. But, well, that's human nature for you.