I think a bigger threat to the brand name isn't people getting scammed, per se (I think people are generally going to understand that $100 bike is cheap), but rather that they are going to come to associate the name "Schwinn" with "cheap" instead of with "a hundred year old company that was known for it's quality". I already see that with younger riders. The old guys in the local bike club probably remember that Schwinn once stood for something. Folks younger than myself (especially the fixie-riding college student crowd) seem to consider Schwinn to be - and always have been - just another department store crap brand. Much the same as how Huffy became considered such.
It is interesting that they sell both dime-store bikes and LBS-grade bikes. I've worked with both, and there really isn't a big difference. There are some minor detail improvements in the uplevel bikes, but they also share a lot of the same cost-cutting tricks as the cheapies. There is greater distinction between new and old than there is between high and low price point on the new ones. I still ride my '61 American regularly. My '09 Classic Deluxe 7 is a cool bike - especially in the two-tone green with orange accents, but frankly, it isn't built better. The frame is definately cheaper made and more cheaply finished. But the finished product does look good if you don't study the details. At the end of the day, I've put more miles on the American since this past spring than I have on the Classic 7 since it was new.
I take this issue to heart because I have or have had a number of Schwinn bikes, and if there was one brand that was consistant and reliable, it was Schwinn. No longer. I've been shopping for a general purpose bike for the bulk of my riding - on the roads, paths, trails, for general recreation & exercise. I've looked at Kona, Trek, Specialized, Jamis, Raleigh even, but Schwinn isn't on my list, much less my short list. It's sad.