I know this does happen, but our parents seem so down to earth at our gym... I have only heard them encourage their kids. I have actually seen this happen a lot in baseball in football though - while it is sad and causes unneccessary stress to the child, parents handle things in different ways and it does not mean that the child is not loved or treated well at home... I have also seen many of these same parents hugging and congratulating their children. It is what it is, I have said it before that it would be great if each child came with instructions... parents (myself included) make mistakes too and I doubt that the majority of the children suffer long term effects... my parents certainly made plenty of mistakes and even said some pretty mean things, but I never felt that they did not love me. I don't like to be judgemental of other parents or other families.
I do not think that it is ever the responsibility of a coach or another parent to step in, even if they are standing right there... and as far as children looking to their coaches for approval, this is a very normal occurence for a child to look for approval from coaches, teachers etc.... it does not mean that the child does not get attention or approval at home.... I would be careful of coaches that judge this type of behavior, especially if they have only been coaching for a very short time.