Interesting question. I opted for the 'both... somehow' option in the poll, but if that wasn't an option I'd go for the first option, with the caveat that an IT should at the very least have the instructional experience to recognise and explain the difference between good and bad instruction.
I recently did a TDI Advanced Nitrox/Deco Procedures Instructor course, and my experience couldn't have been more different than the one Wayne at Diveseekers describes. It was taken for granted that we could do the diving - what was being assessed was our ability to present and explain the theory, demonstrate the skills and control student dives. No free ride, either: we were made to work, any parts of our teaching presentations (both theory and in-water) that the IT felt weren't up to the highest standard were thoroughly and usefully critiqued, and we were made to demonstrate that we could properly deploy and use every single piece of equipment we had on our rigs. Usually while also dealing with the comedy of errors presented by another candidate playing the student role, or while being hounded with failure after failure when playing the student for another candidate. It turns out that I
can deploy my back-up DSMB while buddy-breathing maskless on a deco stop (that'll teach me to take the p*ss out of my wife for genuinely screwing up a reel deployment when she was playing the student!). Not something I'd ever thought of trying, so nice to know... The key point about the course, though, is that the IT slipped seamlessly between the two roles of excellent technical diving instructor and expert assessor.
One would hope (sadly, without much faith) that at this level of diving, instructor candidates are already extremely competent technical divers and able instructors before they even consider becoming a tech instructor. A tech IT's role should surely be to guide, tweak and assess, not teach - they shouldn't need to teach an appropriate candidate anything, beyond going over the specifics of their agency's standards and procedures. I didn't take the AN/DP Instructor course to learn how to teach the diving: I took it so that I could measure my self-perceived ability against an external standard and confirm that I can teach the diving (oh, and get a card that says so...
). In the process, I also learned a couple of things about teaching - you can always pick something up from a good instructor or IT.
As to having to be a CD before you can be a tech IT, that's just a complete nonsense, and perhaps speaks volumes about how PADI view technical diving.