If that were fact, K&N would be committing false advertising. I haven't heard of any lawsuits? Have you? If it were such a bad product how come people still buy them? The company seems to be doing great business for having a terrible product, don’t you think?
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In the forties, cars used an oil bath filter. The air would go through the oil before getting drawn into the engine, cleaning out any dirt particles. The same principal holds true with a K&N. I can't see how a dry paper filter can clean air better than a filter with sticky oil being held in a cotton media catching the dirt.
But to each his/her own.
P.S. To the post above, yes the auto filters are sparingly pre-oiled.