"You counter this with a confirmation that I am in a minority: we no longer value education properly, and nobody but foreigners are willing to study "tough" areas. How is abandoning H1-B program going to remedy THAT?"
Because, simply, if you devalue the reward for a certain type of education, you have decreased its worth; if you return its reward by removing excess external supply, the worth returns and people will choose that education again.
If a bright person is deciding between IT and, say, law school, they're going to look around and ask around and see what post-collegiate life will be like for those two paths.
In the case of the IT path, they'll learn that they will be treated like a disposable commodity, compared unfavorably with foreigners making 60% or less of what he would otherwise earn, and generally live a life of such contempt that it's parodied in national daily comics (Dilbert) and movies (Office Space).
In the alternate course he'll command a high salary, a lavish lifestyle, and a choice of fulfilling career paths.
Doesn't take too long for our bright kid to figure out that 'engineer' is a lousy career choice, so lo and behold you find that all the American bright kids are opting right out of engineering.
This is absolutely no different than any other supply and demand situation. All that's happening with H1-Bs is identical to a hostile 'dumping' of goods; in this case the good is labor.
The second problem with tour model that labor is a bit different from other "commodities" in that adjustments take a long time. So what the young lad of 20 sees is far from the whole picture. It is dumbing down of our education, accelerated since 1970s, that rendered our students unable to compete as vigorously as before. By the time the average lad is 20, it does not matter whether engineering is a well-paying job: he does not know enough math to enter.