First of all, the OOTP25 manual defines ratings as a measure of "player ability." So, that sounds like a measure of overall quality to me.
Nevertheless, let me give you more detail on the 26 pitchers in this Bad Pitcher category. Here are some average stats on this group:
Average current rating (100% accurate): 39
Average projected WAR: 1.0
Average ERA at end of season: 4.75 (Overall league ave. = 3.80)
Average Win-Loss record at end of season: 4W-8L
And here's a couple typical examples, one a bit
above average for the category (40 rating) and one a bit
below average for the category (38 rating):
https://postimg.cc/ftKSS24Y
https://postimg.cc/7Cr5s8wg
(Sorry, I'm not sure how to post images here - the "Insert Image" button didn't seem to work.)
I don't think there should be much doubt that the starters in this category should be as lower quality.
But, the big picture is that there are 26 starters in this group. If someone else might categorize a couple of them on the higher end of the Bad category into the Medium category, and a couple in the Medium category get categorized into the Bad group - it won't matter much at all. The Bad group have essentially the same frequency of good days as those in the higher categories.