maybe the question is: at what point can an arrangement/transcription be considered a worthy work of art?
Beauty is very much in the eye of the beholder, but a few generalisations..
The simplified arrangements common in the early half of the last century designed for home and amateur use tend to be functional rather than with any greater musical value.
There are plenty cases where the craftsmanship of the arrangement is such that the outcome is ultimately a work of art (and clearly recognisable as such), for example Liszt and Tausig's Wagner arrangements and some of Thalberg's L'art du chant set. Side note: it's probably important in this sphere to make the distinction between arrangements/transcriptions and paraphrases; the distinction is often not made and the terms, rather lazily, used interchangeably - paraphrases generally being rather more frivolous and exhibitionistic in intent, in addition to freely embellishing and altering the original.
I'm in general in favour of playing transcriptions, but I believe you have to be rather careful about what you choose, as there are a lot which fall into the category of hack-work. They do give the obvious benefit of giving a recitalist the option of presenting music which in theory cannot possibly appear at a piano recital.