I feel like I have a pretty reasonable perspective on this as I have done tons of volunteer work and research internationally (initially funded by me, now paid for by others) and for the past 3 years have run a non-profit that partners with NGOs in Africa for various support activities, one being connecting them with volunteers.
As the Exec Director of this org (The Student Project Africa Network) I have seen both sides of the coin. And honestly premeds have more frequently fallen on the less delightful side, exhibiting much of the "I paid this much and therefore you need to let me give people stitches and administer drugs" sort of bs. Or the attitude in general that since they aren't being paid to be there everyone should be fawning over them and their "altruism". However, there are also volunteers (and yes some of them premeds! =) ) that have done UNBELIEVABLE work while there. Some have built and stocked libraries, helped to organize huge public health outreach programs, tutored kids for high school and college entrance exams, set up computer systems at schools, and the list goes on. And those things were all done by COLLEGE students. The difference was that they came in fully prepared to work on a specific project, fundraised for it, and exhibited the following:
1) humility
2) respect for the local people and how complex their feelings on volunteers in their community might be. you will always be charged more for everything, get over it. Your ugly t-shirt is worth more than that vendor may make in a week.
3) the maturity to just sit back and learn when things don't make sense, rather than judging
4) patience and flexibility. for real, not the kind all premeds pretend to have
5) a willingness to be a PARTNER with the organization, and be used how they most need you rather than what seems the most glamorous.
If you are a premed that just wants to check the box on your application, or cannot handle even one of the above, then do everyone a favor and do NOT go. Acting like a jerk can have really negative ramnifications, everything from the people you encounter having a bad opinion of volunteers and people of your nationality, to causing real problems for the organization you are volunteering with.
But, if you fit the bill and are genuinely interested in the country and the issues you will face at the volunteer site, it can be a life-changing experience that is positive for both you and the people you work with there. It without a doubt has changed my life, and set me on a completely different path in international health and policy issues. I think it is ridiculous when people say you shouldn't go because there are problems in your own community. I see the world as my community, and am far more interested in health problems facing people in India, where I currently am, than in my small Wisconsin hometown where the public health crisis is a statistically high number of teenage girls becoming pregnant.
From what I have seen through SPAN premeds feel more useful when they are with a public health program rather than in a clinical setting. In a clinic, at least in Africa, people usually just see really sad things and feel helpless to do anything about it. In public health programs you get to do outreach within the community, and anybody can learn how to educate people on a certain health topic and be an active part of the team. Or, another really good option is to do a health-related research project sponsored by a US academic institution, this is likely to be free or even stipended. I worked with UCSF last spring in Egypt and it was awesome.
As for costs, the original point of this thread, the whole reason I started SPAN was because I thought the amount programs charge volunteers is unconscienable. Yet don't be offended by paying a reasonable amount if local people are providing services for you. You can afford to spend your day as a volunteer, most of them can't. Is $1700 reasonable? Maybe, if you want a really highly structured program and past volunteers have said they got their moneys worth (INSIST ON TALKING TO THEM!). Although I paid that much for my first international volunteer experience, and the support i got was a joke, a sentiment that i have since heard repeated by other volunteers.