It's very popular in the Linux / Open Source world to bash certification programs. There is every truth that there is no substitute for hard-earned experience, but my experience, both as a Linux and Solaris certified engineer, and as a hiring manager, is that there is value in them.
The early LPI exams are easy, but well-designed, comprehensive, and kept up-to-date. They are also vendor-neutral, which is ideal for junior sysadmins wanting to get up to speed.
The more senior exams are really quite well thought out, and go into considerable detail. I would say it would be difficult to pass LPI2 and certainly LPI3 with a purely academic knowledge. I would, however, state that in my experience the best certification courses are those with a heavy bias towards practical testing, such as the RHCE.
One significant value in doing these sorts of certifications is that it forces one to look at and experiment with every aspect of Linux administration. This is especially beneficial if professionally your current role only exposes you to a certain subset of the discipline.
So - the true value?
Potential employers are likely to be impressed with a senior LPI qualification, particularly if you work in the contract world. However, in reality I don't think it's truly a badge that demonstrates your professional capabilities, for anything but a junior admin.
However, for your own development, discipline, and interest, I'd say they're well worth doing. Especially if you can get your employer to pay for the exams, or you do them for free at a conference! :)