First, you're right, Kenny G's music isn't jazz. He himself doesn't call it jazz and it doesn't fit the genre. Just because the music lacks words and highlights an instrumental break does not make it jazz. Next, he IS an accountant, a CPA by profession before he got a break as a musician, though ArJay probably could have stated it better.
Mass popularity proves nothing. If that meant anything, then Mariah Carey and Justin Timberlake would be considered musical geniuses. Kenny G's music is pleasant and relatively inoffensive and also unchallenging. Great music moves people, and is more than merely inoffensive.
For me, his music lacks a spark, a sense of soul if you will. He in no way should ever be compared to the greats in jazz history. If you truly believe he's in the same category as Dexter Gordon, Charlie Parker and John Coltrane you really show how little you know and understand about jazz as an art form. Those men had a passion, a fire, and an incredible musical imagination in their playing that is clearly evident. I'd suggest that you get some of Parker's or Gordon's records and listen to their interpretations of standards and then tell me neither had imagination or passion. For that matter, listen to their originals and tell me they're not moving and are unimaginative. Kenny G's music doesn't move, doesn't challenge. It just is.
Look also at the history of jazz. The beboppers did not cause the decline of jazz as an artform, it was already in decline starting in the post-war period before the beboppers came along. Fewer people were listening to jazz at that time. Ellington and Basie had both all but disbanded their orchestras because they were drawing fewer folks to their concerts. It wasn't till the great Newport Jazz Festival of 1958 that jazz had a renaissance. Some people blame jazz' decline on rock 'n roll, though I think that's a bit of a stretch. Music's popularity changes with generations. Before jazz was popular, folks listened to Tin Pan Alley songs, and before that classical. Did jazz cause the decline of classical? No, it was a generational shift. Each generation looks to move away from the music their parents listened to. It happens in every decade/generation and is not the result of a handful of musicians.
What Kenny G does have is a gimmick, one he uses to great effect, circular breathing. Wynton Marsalis also has it. Louis Armstrong was a kind, generous and magnanimous individual who was the ambassador for jazz for the better part of the 20th Century. He'd be proud of Kenny G to the extent that Kenny G brought jazz back into the limelight, after having languished in darkness for years. Jazz is all about evolution and challenging boundaries. Smooth jazz is another part of that evolution. I don't like it. If you do, more power to you.