I think part of this issue and the ensuing uproar is that it's being used as a filler. It's padding the product. They end up putting less "cheese" in their products so their costs go down and profits go up and it's the consumer who ends up getting screwed.
edited to add:
A class action lawsuit has been filed against Walmart for selling "100% Parmesan Cheese" that was up to 10% cellulose:
"Walmart Sued for Selling Parmesan Cheese Containing Wood Pulp"
QuoteA class-action lawsuit has been filed against the retail giant for selling cans of "100 percent" grated parm that tests showed to actually contain up to 10 percent cellulose, reports Bloomberg.
There's a link at the bottom of the article that leads to scans of the actual filed court papers.
Looking at the label in the picture in that article of the contested product, one could quibble, though, that of the cheese used in the product above that that cheese could have been 100% Parmesan cheese. It just also happens to have other ingredients along with it in the container (meaning the cellulose, etc).
Hey, I'm just sayin'...