A very apposite topic. Sorry to talk about my own games, but I have direct and recent experience of this issue, as the artist I'd engaged for Sci-Fi Beta Kappa pulled out of the project a few weeks before launch date, leaving us with gaps in the text that I had neither the time nor the inclination to edit out (the editing and laying out itself having absorbed a huge chunk of my time, not to say sanity). So I was left with two options, which were pretty much Rob's alternatives: clip art or no art. Notice I don't say
bad art, as clipart doesn't necessarily mean bad art, although it frequently does; or rather, it does if you're just grabbing images here there and everywhere, which people who are under the cosh as regards deadlines, and/or lack artistic training- and hence discernment- are likely to do.
In the end, I spent about a day combing clipart.com for suitable images, i.e. ones that followed Rob's constraint about appropriateness, and weren't
too ghastly (believe me, a depressingly large proportion of them were).
But I haven't answered the question: is bad art better than no art? I think if you're talking about a quirky indie product costing no more than £10/$14, on the whole it doesn't much matter, as long as the art isn't absolutely hideous (of course, definitions of quality in art, be it visual, textual or musical, are notoriously subjective- forex, I personally can't stand Tracy Emin or Damien Hirst, but tell that to the collectors who pay millions for them). If OTOH you're producing a fantasy epic with a page count in the 100s, then no, 'bad art' isn't better than no art. However, in both cases, as Rob says, the art should fit with the text and not simply be there for the sake of it.
Not sure if that answers the question in the OP, but FWIW them's my two penn'orth

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