Interesting that this rumor is out there. During a Q&A session a couple of weeks ago, CNATRA himself specifically said that he did not want to go this route. The question was brought about by a helo instructor who said that he was worn out and was asking if civilians could be brought in to provide some relief. CNATRA said specifically that there was no shortage of pilots needing shore tours and that he did not see this happening in the VT squadrons training our pilots.
As for the idea itself, it would be a sound financial decision, at least in the short term. I think as someone said above, it would be a good idea to augment some of the billets with civilians, but to replace all of them would just eliminate too many flying billets period, nevermind shore duty billets. I think the civilian sim instructors are OK, but those guys are out of touch from the students and what is happening in the fleet. Besides, in the NFO tracom, the civilian pilots are also flying with military IP's, it wouldn't be that way training pilots.