Hiya All,
The way it was explained to me is this:
You have to meet a certain experience level in terms of hours, PIC and so on, and these are outlined in the FAA inspectors handbook (emphasis is on CFI and dual given). They are not insurmountable, and anyone who has been in the industry a while should have them. My private was given to me by a guy whos real job was a high school physics teacher.
Then you go to the local FSDO and give them an "expression of interest" letter, that they keep on file.
If there becomes a need, and they pick you, you get sent to Oklahoma City for school, checkride etc. You then have to go to recurrent training and checkrides every year or so, and maintain a certain level of activity. At first you start out with the basic ratings (PVT) and can work yourself up, and your designation is only good for a certain region.
From what I'm told in reality is that it is a political process. You have to be a "known quantity" in the local aviation community. I guess that means you have to do your time at the various local seminars and be an active CFI/checkairman/aviation buisness owner. Lots of experience as a Part 121/135 checkairman or a Part 141 Stage Check Pilot would probably be very helpful, as that covers alot of the same procedures and paperwork. There also has to be a "need" for a new DE, and that means whatever the FAA wants it to mean.
Very best,
Rich