There have been MANY postings on CB about alarming things that parents notice while watching practice. Things like wasted time, bullying, coaches being verbally abusive, skills being taught in an unsafe manner, etc. And these are things that take place with the parent right there.
If DD's gym instituted a no viewing policy, I would remove her from that gym, asap. That said, we have glass, and I have never, ever heard a parent attempting to coach from the viewing area. Also, there usually aren't more than one or two team parents watching any practice (and we have a large team) but there is always a large crowd of rec parents. Honestly, I don't think our coaches notice, or care, who is watching.
As a parent, I have the responsibility to ensure that my DD's surroundings are safe, both physically and emotionally. Watching an hour of practice every now and then helps me to feel confident in the coaching DD is receiving. Watching helps me trust the coaches more, not less.
If parents are losing confidence in a coach after watching practice, the problem may actually be the coach. Most parents are reasonable people who only have their child's best interests at heart. Sure, there are a few nutjob parents, but there are some nutjob coaches too. I would rather deal with a few overinvolved parents than a potentially harmful coach.