Extremely valid points all, @meno. It would be so easy to just start spamming posts and riding the upvote bot train and no, that's not the way things are supposed to work.

Steemit is like life in microcosm in a way: shortcuts usually lead to dead ends. Bots are just such a shortcut because, long-term, they lead to the outcome you describe:

Steemit’s content keeps on getting diluted with shit posting, let's say that more and more people stop making a conscious effort to make good posts, to add value to the platform and decide to throw in the towel and give in to the casino upvote game.
What would that look like? What would be the motivation for mass adoption? What would make a big youtuber jump onto this platform and abandon twitter, or facebook? If the value of the content becomes unimportant, how are we to grow from the beta stage? I'm having a hard time answering these questions, and finding bitter flavors at every turn. But it hurts me to imagine what the worth of 1 Steem would be on a blockchain like that.

Me, I have used them and not used them. The conclusion I've come to is that Steemit is ultimately made by people, for people and of people. It can only grow in magnitude and in quality if the people themselves do so as individuals and as curation collectives.

Bots are useful as a nice little boost here and there but overuse them would turn them toxic -- no, cancerous.