Well, I have actually found a cheeky way to identify the youth players with the best underlying talent rating (or whatever method the game uses), which also proves, in my opinion, that salary equals talent. It can almost be considered cheating, so I'll let you decide whether or not to use this technique, but it's interesting for research purposes alone:
1) Save your game at the beginning of a new season, just before the contracts page comes up.
2) Head into the contracts screen, and look for potentially good youth players. If you don't see anyone promising, Ctrl-Alt-Del and end Cricket.exe process in the tasks menu. Restart the game and reload your save and try again (this is why I consider it cheating, though it's not as bad as using Ctrl-Alt-Del to win matches, IMO)
3) When you do see a potentially good player, sign him on and finish your other contract signing.
4) Click the "forward" icon a few times and go into the team selection for your first game of the season. Now, the AI will, by default, select the 11 MOST TALENTED players in your squad (regardless of anything else). If your youth player is automatically selected for the 1st XI, you have a superstar in the making. If he isn't, Ctrl-Alt-Del and restart, going back to the contracts screen again. If he is, you can even start a game with him to see how he does, as long as you don't save mid-game or finish the game (as ICC auto-saves at the end of every match and you'll be stuck in that season, unless you create a backup of the save at the point before the contracts screen).
5) Rinse, lather, repeat until you have your own Sachin Tendulkar, Shoaib Akhtar or Shane Warne.
One final note is to look at their positions. If you take on a middle-order batsman, and he gets put in the team automatically at #3 (above Owais Shah and Ed Joyce in my case), the game registers him as better than the players beneath him at #4, #5 etc. This means my new #3 is better than Owais Shah (Bat Av. 43, Salary 86,500) in the game's eyes. It's similar with fast bowlers: if he's given the (1) new ball, he's the best fast bowler in your squad. Spinners are slightly more tricky, since they're never given the new ball, but if he's in your side automatically, he's worth a punt at the very least.
The moral of the story here, in keeping with the thread, is that my #3 youth batsman (the one who was auto-placed above Shah and Joyce), was demanding 88,500 at the end of his 1st season, at the age of 22. He's now England contracted, so I can't tell what he's worth now, in his prime at 27. But he's averaging 60+ in most forms of the game, and for me this is proof that a player's talent dictates his salary and, hence, the better players are the more expensive ones, be they youth players or otherwise. Sure, they might have an off-season (as in the McGrath/Bracken case), but more often than not you'll get good service out of pricey players.
Sorry for the super-long post! Hope it wasn't too boring.