However we spent a good deal of time chatting to Mike from Paradise Divers at Happy Days -- he has been on the island for ten years -- and he was more positive.
Yes, by the end of the season (which is when we were visiting) the fish were mostly gone (fished out) but they repopulate through the wet season and at the start of the next season there should again be plenty of fish. As for the coral -- yes, all the shallow stuff is gone, but if you go deeper, to depths snorkellers do not generally reach, the coral is still good.
Ko Kut is not national park, and even on our snorkelling trip there were locals fishing in the same water we were snorkelling in, so an untouched diving paradise this is not. If you want to give it a go, we'd suggest you go and talk to Mike -- we found him to be very honest and straight-shooting about the conditions.
There are three dive shops on Ko Kut:
Koh Kood Divers
Paradise Divers Koh Kood
T: (0871) 445 945
Rates are comparable between the three with fun dives going for 2,000 baht, PADI Junior Open Water Diver for 12,000 baht and advanced open water for 13,500 baht.