MrBubbles: OK I'll summarise what I know of the Callan method. It's seems to be a mixture of Audiolingualism and the Direct method in that while grammar is mentioned here and there, the main focus in on the students' spoken production, which is based on drills. The principle being that by repeating similar drills over and over really quickly, the student is conditioned into giving a certain response to a certain question.
Actually, and this is a common misconception by people - there's actually a huge amount of grammar in Callan. It's badly explained and taught in the 'method' however - as it seems that Callan realised that he needed to explain grammar, but didn't have any sort of experience and so forced it into fitting the 'method'.
My school uses Callan more as a frame in this sense - while the Callan explanation for the 'past progressive' will be used to begin with, it'll be backed up with proper teaching of the relevant grammar. It seems to work well - Callan gives the quick guide to it, but they will be given exercises and more exercises until it's thoroughly understood.
MrBubbles: The Callanoid stands at the front and takes the class through a series of drills in a definite order based roughly on increasing grammatical complexity, the principle here being that by improving your grammar, yuo improve your language skills. If the student says something correctly, they are rewarded with a smile from the teacher (positive reinforcement of good behaviour). Bad behaviour is discouraged with a frown and a disapproving tone in the Calbot's voice.
This again is where individual schools differ. For instance, in my school - giving the 'wrong' answer according to the book is encouraged, provided it's correct. But when you get schools that insist on the answers only being 'book' answers - then they're quite clearly dreadful and exist solely to make money.
MrBubbles: On the good side, the students are speaking from day one. But then again, in a well-managed communicative classroom, they would do so too. Also, untrained natives can be taken straight off the boat, given a book and be sent into the classroom. Aslo there;s nothing to prepare.
Everyone is trained properly at my school, thankfully. But we are encouraged to put our own slant on things - which means preparation. Essentially, we mix Callan and other styles as appropriate - which is entirely down to us as teachers. Obviously there's communication between the secretarial staff and the teachers as to what people are thinking, but generally speaking, it works rather well.
MrBubbles: On the bad side, there's no interaction between students. There is no groupwork. There is no free practice. There is no exam practice. There is no ESP language. There is little development of the student's own idiolect. there is less development of the student's own ability as an active learner. There is no accommodation of student aims or learning styles. The student communicates with noone but the teacher, in fact there is no authentic communication at all. And that's just off the top of my head.
Likewise, many of these problems are solved in my school through careful teaching. Generally speaking, those who rely on memorising the book are weeded out quite quickly - as we're allowed to change the questions as we see fit. It's always rather satisfying to nail the 'memory learners' with changing a question around - or even asking 'why?' when they're least expecting it.
But these people are encouraged to learn through other methods of teaching too. For instance, I always try to introduce new things which get people thinking in/about English. My latest trick was to make people give a presentation with absolutely no notice about a certain European landmark - and made them ask questions and give answers. Given that even the worst Callan class will have one or two confident speakers, it worked beautifully in terms of getting people to talk. But that's my style - everyone is different.
All those negative things you've mentioned are definitely huge problems in a 'real' Callan school. I can name a school in Poznań which is actively putting people for the FCE exam after completing the 'Avalon' course - yet because of the complete lack of preparation that it provides, they are basically putting people forward to fail. It's disgusting to watch, as it really is purely about money.
I think ultimately, Callan (or any other method)'s success is in getting beginners to talk in a comfortable environment. But once they can communicate in English (no matter how badly), Callan falls down badly - and as you say, only succeeds as a moneymaker.
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