I think they're dishonest, those "Steam outline" things, pretending to be a steam engine to entertain the kids when they're not. Sir Topham Hatt would never have stood for it.
One of the worst examples was Bicton gardens in Devon, where they did have two very interesting engines; a genuine 0-4-0 tank from 1917, I think, called Woolwich, and a very interesting Hunslet diesel thing, but when New Management took over they replaced them with a dreadful Steam Outline thing.
There's quite a lot of them about as
robvulpes mentions, and I agree with you in thinking that they're unneccesarily dishonest, and they're not fooling anybody except young children. There's one in the gardens by the opera house in Buxton, and it's easy to tell that it's not a steam loco, despite appearances, as it comes round the loop accompanied by an unmistakeable diesel loco hum! The miniature railway at Blackpool Pleasure Beach is the same IIRC; an apple green, diesel powered Atlantic or something. It would be a very pretty little thing if it was actually steam powered, but something is lost when it's actually only a diesel loco.
If there have to be diesel locos on these sorts of lines (And no doubt it makes economic sense to do so), then at least leave them looking like diesels. Although it's just a bit of fun for the kids I suppose, so I can't really get too worked up about it.
Conversely, I remember a few years ago on the South Tynedale Railway, a kid of about 7 years old was peering into the cab of the loco during the stop at Kirkhaugh, blazing fire clearly visible through the open firebox door and steam hissing away contentedly outside. This kid turns to his Dad and asks "is this a steam engine then?" His Dad answers back, absolutely deadpan serious from what I could tell, "No son, this is a diesel."

hock: If I can see that much fire in the cab of a diesel loco, I'd want to be moving quite quickly in the opposite direction!
