Just like ugly paper, ugly fabric can be redone. In the past I've taken ugly paper using inks, paints, etc and made it into new pretty paper. One can do the same thing with ugly fabric using fabric paint, pens, dyes, etc.
Just like ugly paper made pretty can be used in ATC's (artist trading cards) as backgrounds or stand alones we can do the same with ugly fabric. Use them in ATC's, FTC's (fabric trading cards, postcards, wrapping for gifts, etc) and yes even work them into applique work.
I actually like to buy as cheaply as I can good quality paper or fabric to design and create my own backgrounds, usually one or two of a kind depending on the size I'm working with. You can even find such in thrift stores and such and work your magic.
I've add pieces of ugly paper that I worked up and it still would not come out right so would use crackle paint and oh boy how awesome it came out. No different with ugly fabric.... get those fabric pens, inks, etc out and have at it and have something no one else has.