Although learning, and research for the sake of knowledge itself is not a bad thing, it may not have any "real world" application. Academia often focuses on a "publish or perish" mentality, and even if the academic papers are published in a journal with extremely small circulation, someone is still presumably reading them. There should be a little balance and focus on more than just theory.
Yes, academics spend an awful lot of time on theoretical applications. While some of this is good to an extent, more academics need to figure out the practical applications of their research. Or they need to partner with people and entities that can help bring out the practical side of their theoretical research.
While I think that academic paper assignments do allow the student to learn by doing research, theoretical applications are overrated. My current field of work in the film industry is a great example of this. The students who complete the vocational class at the local community college set foot on a set and know leaps and bounds more than students who graduated from the university with a media arts degree. The university only teaches theory, which is not helpful when the students set out to finally get a job.
The travesty here is that so few people are reading academic papers. Sure theories don't always lead to applications over night, but they often form the foundation upon which later papers and later work which does have immediate applications is built. The greatest work comes gradually and with time and patience.
If more people read academic papers it would generate more insights and ideas and potentially lead to faster innovation and research.
It really doesn't matter who reads an academic paper as long as the author has gained knowledge from it. Most are simply a person with a passion, trying to prove something to themselves. Most are unread, and that's okay, as there are plenty of them out there to go through when info is needed.