stevewishart, having studied for it, taken the exam and now am applying for my perement residence, I don't think everything you say hold water in my opinion.
I actually looked forward to it. £34 is arguable if it is a cash cow... I think the vast majority of it is retained by the test centre and doesn't end up in the coffers. If I were to tackle something that is disporportionate cost, I would tackle the visa fees. There is no way the real cost of getting a visa costs £750. Visa service fees amount to over £600,000,000 in revenue for HO every year. £34 is the least of my worries.
The questions try their best to run the gamut of life in the UK. Banal at times, there is a lot of good stuff in there. I actually am proud that I took the exam and I actually cherish my certificate. I don't think it is all bad. I personally feel that there should be some standards in your progression towards Citizenship, I just disagree with some of the ways they wish to measure them, not accounting for how people actually contribute to society. But for a government run programme, it is one of the better ones.
[Edit to correct data because I can't count, thanks ptc]