The trio couldn't be credible sources to media, but they could at least tell the truth to Dumbledore (if Dumbledore already didn't know) or others who could spread the word.
According to Pottermore, Dumbledore knew that Lockhart was a fraud:
Albus Dumbledore’s plans, however, ran deep. He happened to have known two of the wizards for whose life’s work Gilderoy Lockhart had taken credit, and was one of the only people in the world who thought he knew what Lockhart was up to. Dumbledore was convinced that Lockhart needed only to be put back into an ordinary school setting to be revealed as a charlatan and a fraud. Professor McGonagall, who had never liked Lockhart, asked Dumbledore what he thought students would learn from such a vain, celebrity-hungry man. Dumbledore replied that ‘there is plenty to be learned even from a bad teacher: what not to do, how not to be’.
So Dumbledore not only thinks it is acceptable to hire someone as a teacher who is not qualified at teaching, he even thinks that having Lockhart in school will somehow reveal Lockhart as a charlatan and a fraud. How that was supposed to work is anyone's guess.
Even Hermione, who is described as a rational girl, has a crush on him:
‘Why,’ demanded Ron, seizing her timetable, ‘have you outlined all Lockhart’s lessons in little hearts?’
Hermione snatched the timetable back, flushing furiously. (CoS)
While the boys were not impressed with the test about Lockhart, Hermione thinks there is nothing wrong:
Ron was now staring at Lockhart with an expression of disbelief on his face; Seamus Finnigan and Dean Thomas, who were sitting in front, were shaking with silent laughter. Hermione, on the other hand, was listening to Lockhart with rapt attention (CoS)
And a little later, immediately after the incident with the Cornish pixies, Hermione still defends him:
‘Can you believe him?’ roared Ron, as one of the remaining pixies bit him painfully on the ear.
‘He just wants to give us some hands-on experience,’ said Hermione, immobilising two pixies at once with a clever Freezing Charm and stuffing them back into their cage. (CoS)
While Hermione later lost her admiration for Lockhart, it is likely that others didn't, because humans have a tendency to keep their opinions regardless of facts.
One example of this is Mrs Weasley. Even though she must have heard from Ron that Lockhart tried to erase his memory and stop the rescue mission for her daughter, she still uses his book. Worse yet, the information there is probably useless, as Lockhart regularly mentions spells that don't exist or are not suited for the given purpose. But a charming smile is more important than his character or whether the facts mentioned in his book are useful.
Mrs Weasley was bending over to check the page on Doxys in Gilderoy Lockhart’s Guide to Household Pests, which was lying open on the sofa. (OotP)
So it's safe to assume that a significant part of the students were convinced that Lockhart was at least incompetent, while the other part would rationalize to themselves why he behaved that way, like Hermione does in the beginning. To consider him incompetent doesn't mean to assume that he erased other people's memory. It is even possible to assume that he is average in normal situations, but rises to a challenge in life or death situations, as Harry does at the end of each of the books.
Parents hearing from their children would probably discount it as badmouthing a teacher because they don't like him or he demands too much or something similar. Lockhart still receives a lot of fan mail, so it is clear that it wasn't generally known that Lockhart was a fraud, despite Dumbledore's plan to reveal him as such.