So guys - help out a brother here. Assuming local, non-resort service - what do you tip for:
a). OW class
b). Advanced class
c). Rescue Diver class
d). Specialty class
Just wanted to make sure we stay on topic! As with most things, even with the narrow parameters of the OP's question,
it just depends!
I have worked for both resort and non-resort dive operators here in Hawaii. The non-resort jobs were all different; one dive shop with a small 6 passenger dive boat, a 13 passenger certified dive boat run as a 6-passenger and a well run 13 passenger dive boat, both of those with no dive shop.
Most of the instruction for all these companies is done as shore dives, although OW dive #4, AOW Deep+1 and some Specialties are often done from the boat. The majority of the customers for all these operations are tourists, staying in resorts.
Local customers happen.

Here in the Islands we have a local discount called the kama'aina rate. All my dive employers here have given some form of kama'aina discount. We hope to develop a relationship with the customer such that they would remain customers and refer both locals and tourists to us for their diving needs. A class of 4 kama'ainas is usually a break even for the owner (no profit), unless the owner conducts the class. Less than 4 is often run at a loss for the owner.
Instructor rates for non-resort operations are $80-$100 per day, although my current employer pays by the head. Because most divers and prospective divers mostly go with the least expensive class, most classes are priced lower than makes financial sense. That means nearly all OW classes in the Islands are "4-day" classes, where the "first day" is you by yourself reading the book and doing the Knowledge Reviews.
In order to get 4 locals (who probably didn't do their homework) through in 3 days, at least one day will be 10 hours. The second day might be 8 hours due to the logistics of getting 4 new divers through two shore dives. The final day could be only 6 hours because of the prior days practice, but if it's a weekends class most people don't remember.
$300 divided by 24 hours (best case) is $12.50 per hour. With rent here around $1000/mo for a studio apartment and milk $5.50/gal, $12.50/hr is not enough to pay the bills. Busboy's (& girls) in the hotels and resorts make more than that, before tips! Fast food and convenience store jobs start at $10/hr. Calling a dive instructor "a Professional" is just a crutch for a bunch of cheap bastards!
Just because your instructor's "other job" is "lawyer", or "bartender", does not change the fact that most instructors are making $10/hr if they are lucky when they teach the local non-resort students. And least we forget, the instructor is "only" training you to survive and enjoy yourself in an alien environment; instruction which done improperly could cost you your health, or your life!
Now let's look at the costs of being a scuba instructor. Annual membership fees and annual instructor insurance is "around" a thousand dollars (some pay less). Dive equipment wears out much quicker, for shore instructors especially. Tomorrow I am paying for my/our biannual First Aid and CPR certs, as well as having the boat not run on one of my scheduled work days!
A busboy's biannual costs are a couple pairs of pants and a pair of shoes!
Luckily, the locals in Hawaii are way more akamai than SB's vocal minority. In 7 years of certifying the occasional locals, I can count the non-tippers on one hand, and often meals and drinks is more gratuity than cash!