Value investors of course don't invest just in income stocks. They're looking for price appreciation from their holdings just like the growth investor. The difference is in what the value investor is willing to pay upfront for those future earnings. There's been resurgence in value investing in the past year and a half after a period dominated by growth investing. The key to successful value investing is being able to separate the wheat from the chaff.
Stocks trade at low multiples for a variety of reasons.
Being able to distinguish which of these stocks represents value and which will continue to fade is the hallmark of a good value fund manager. You're right to think that value indexing isn't the way to go. Once you get away from index investing you'll struggle to avoid sector bets in your portfolio. Indexing gives you less technology exposure than it used to, but you'll have trouble avoiding that too. Value funds are looking for the market to change its thinking on a company's future prospects.