Some of this echoes some of what I have been thinking about recently after recording some really shitty bands.
Sometimes I think a lot of engineers over produce band demos to a point that the guys in band believe they are good and can play that shit, when in reality they can't.
Sometimes, when a band is shit and you have recorded them, it would be doing them a huge favour to simply mix it to a point where the audio is good, but leave the shitty playing alone, just so they can hear how much they need to improve.
When I started recording in bands, it was all to tape, no beat detective, no autotune, no editing, so we got the idea that if we wanted to sound good, we actually had to know and play our shit, and I think that remains with me today.
Obiouvsly if your being asked to produce something that will stand against a commercial release, then use whatever tools/methods you can..
Basically, as in most threads, bands suck...