I was one of the people who criticized Qin Yu, and it seems like the majority of people who defended him were of the opinion that it's just accepted in this genre. These stories are clearly very addicting though so no need to change what's working I guess.
It's not just the main characters who are douchey though, it's pretty much every character treating anyone weaker than them like trash that gets old sometimes.
Xianxia is a relatively new genre (correct me if I'm wrong) and targeting teens, so it'll probably be a while before some talented writer mixes elements of this with the more classical elements.