I'm not sure that any conclusions can be drawn about the design of this lens from the flecks inside Jake's copy, it would seem fairly clear that this a problem in the clean-room manufacturing environment of the batch of lenses that were sent to SA.
L lenses have better weather & dust sealing and you pay for that.
Every individual must judge the various aspects of a purchase and draw their own conclusions about the value-for-money of a lens for themselves. For me the excellent IS, the zoom range and the superior sharpness of the 17-85 make it worth the price.
You get what you pay for, but you're not always paying for the same things. Canon could have put the 17-85 optics and IS in an L-grade casing, but it would then have been even more expensive. None of the camera bodies that accept the S lenses are weather sealed so it's not surprising that they chose not to do so.