"I tell you what though, there are a great many issues that could be cleared up by a bit of exercise, good food, hard work, altruisitc acts and laying off the booze"
I'm with others who picked up on this statement of yours - yes, all these things can be really good to keep you on an even keel but if you can't get to a place where you can do all this stuff (and modern life makes it very easy for us not to), then counselling/therapy or whatever you want to call it can be very useful in getting you there.
I have read studies that show that exercise can be as useful as ADs - but if you are in a depressed state without encouragement, ADs are an easier way to start.
Self-indulgent? Not really I'd say if it helps you function better in the world. Taking this attitude, one could say that taking "me time" to do exercise is also self-indulgent.
Counsellors as the new priests? Well perhaps, in that the priest was someone to talk to.
A lot of people on here recommend relationship counselling because they have first hand experience of it helping them to communicate -certainly not self-indulgent if it helps avoid the fallout of a divorce.
Damaging? Yes, certainly can be and not only because you've ended up with a charlatan but also because you might have put all your hopes into counselling as the final resort to make you better, and if it doesn't, then you might feel that there is no way out.