Well the 11am-Midday FTSE intra today had around 70k matched, so it's not that far off the amounts which were traded a couple of years ago. A few people have suggested introducing a time delay but I think that would be a very bad idea and could kill the markets off completely (especially as there is no "in-play" delay when trading live futures markets, so why should there be a delay on Betfair?).
You are absolutely right about the presence of people/bots on Betfair with extremely fast feeds - however, those bots operate on pretty wide spreads, so my aim is to find the fastest feeds possible and MM comfortably inside the spread of those bots, therefore rendering them out of action 🙂