In my opinion, an ethical breeder is one who takes care of their dogs. If they're breeding labradoodles, pugs or mutts, they have to care for their animals as well as possible - they have to provide decent food, a clean living area, thorough vet care and a good partnership relationship with a human.
Finer points - I believe anyone breeding for show or pet homes has an absolute responsibility to make a gentle temperament their first priority. I don't care if the breed was originally intended to kill bears or guard estates, the puppies are going to be living in normal 21st-century homes and all the breed history in the world doesn't justify creating another generation of dangerous dogs. There are more than enough in the world already. The only exceptions are for people who breed exclusively for working dogs - dogs who, if they aren't good enough to work, will not be simply released to the general, unprepared population of would-be pet owners. This is a tiny subsection of the dog world.
I believe that it's possible that breeding mutts or 'pet-quality' dogs is a good thing. It's true that there are many dogs in shelters who need homes, but it's also true that many of those dogs are unsuitable for the majority of available homes. I love all three of my shelter dogs, and have never had any interest in breeding dogs, btw, I just think that playing the numbers game - there are 3 gazillion dogs in the shelter, and that labradoodle just doomed one! - is pointless. That argument behaves as if all dogs are equal. I'd rather have my shelter mutt than any purebred at the local AKC show, but I'd rather spend $1000 for a purebred than $50 for an ill-natured shelter dog.
The breeders who are really destroying dogs are puppy mill operators and the people who breed so-called fighting dogs. These are the dogs who, when they end up in shelters, are the most likely to be unadoptable, unhealthy and nasty. They create the large numbers of puppies and dogs who become unwanted every day. The lazy guy who never got around to neutering his dog, or the woman who wants her kids to experience the wonder of puppies before neutering their pet - they might not be the most responsible of owners but their output is just a drop in the bucket compared to the people who produce thousands of litters a year for pet shops and the people who intentionally produce aggressive dogs for fighting/posturing. The worst 'doodle breeder in the world would blush to be as openly craven and greedy as these two.