I didn't think the DM Graphic Encycopedia art was that bad. Not that great, but not that bad, and certainly better than none. I do agree that many d20 products have terrible art, and that can be a deciding factor in whether I purchase an item or not. It is true that DM Press goes on and on about how bad other art is while their art goes from good to poor (sometimes on the same page), so I think that might have something to do with the "backlash" of negative opinions here. Just my two cents.
Examples of art in the book I liked:
I thought the Alhoozitz Wight art was great (okay, so I can't remember the exact creature's name, LOL)
Csearana the Red, Serpent Priestess and the Mystic Assassin (might have forgotten the name but the female demon in tight black leather seen from behind) was all good, evocative cheesecake art.
Examples of bland but decent art: all potions and magic items, (very computer generated looking)
Examples of just plain bad to pathetic art:
The Fire King
Varspawn
Keep in mind that my opinions may change if I could see the art close-up in detail rather than in the tiny flip book viewer...