As system improves, do bad recordings sound worse?

bad recordings should sound better but the differences between all kinds of recordings should become more apparent. most recordings should be listenable unless the copy is defective.

Depends on what you compare to.

They may be more disappointing and seemingly worse in comparison to good recordings now but should still sound better than they did originally.

I am increasingly of the opinion that the mark of a good system is that most all recordings of interest at least sound good enough to retain the listeners interest. Most recordings have deficiencies versus the ideal but few sound "bad" to me off late, unless they are defective in some. Defects that can make a recording sound bad are more common with vinyl (usually wear and tear on the grooves with used records more so than inherent manufacturing defects) than CD/digital I find.

If only audiophile quality recordings that you like sound good enough to retain your interest, I think there is a good chance something can be done with the system to rectify that, often without having to undertake an expensive upgrade even.

"no longer bothersome, just limited"

That is a very good way to put it!

" the better yr system gets at resolving details from the recording, the more revealing it is of poor recording quality."

yes, but I think its more all recordings sound better or at least more listenable but the best recordings move ahead further so the apparent gap is more obvious and perhaps even wider.