And, one more time, there is an actual breed called Dutch Shepherd (Hollandse Herder), that does not come from Malinois. The people with the mixes don't want you to know that. (They both evolved from the same general population of farm dogs over 100 years ago, as did the GSD. But with the exception of some interbreeding to renew the blood after WWII, they are not breed with Malinois, and do not look like Malinois. They are smaller, longer, have a different head shape, and different temperament.)
I am no expert on malinois or dutch shepherds, but I have done a bit of research on them. In reference to the statement above, there is a distinction between the pedigreed or FCI Dutch Shepherds and the "unpedigreed" KNPV Dutch Shepherds. Here is a link that describes the difference: http://www.vankamphuis.com/dutchiehistory.pdf
It is the KNPV dogs that seem to be in demand by law enforcement and military. The difference in KNPV lines is that a "malinois" is fawn colored and a dutch shepherd is striped. It is also not much of a secret that several different breeds have been folded into some dutch lines at one time or another. I have seen references not only to GSDs, but to Dane's and pits among others.
I have no personal experience with malinois or dutch shepherds. However, a couple years ago I went and observed the protection phase of the K9 trials for a local police department (fairly large metropolitan department). These trials draw teams from all over the west and Mexico, so there was a fairly large sampling of dogs. There were significantly more malinois/dutch shepherds than GSDs.
This was a real eye opener for me. Without getting into too much detail I will say this: the KNPV "mutts" were impressive and really stood out! Thus, the crossing of breeds is not always a bad thing - depends on the goal and the execution.