One belief that has been gaining ground in the whisk(e)y world over the last five years or so is that higher proofs, especially cask strength or barrel proof, make for better spirits. There are all sorts of reasons given for this - there is more flavor, it's more 'pure', you get more bang for your buck (or put more punchily, "why pay for water?"). But as with many other attempts to create rules for deciding quality, I think it's less reliable than many might wish it to be.
I think the way that this argument falls flat most quickly is on price (I will be pulling from my local market for comparisons as much as possible - the ratios may be different where you live). Generally, cask strength whiskies will be roughly 40% more concentrated then their watered-down brethren. So a commensurate increase in price is not out of line. However, it doesn't take much poking around to find examples where cask strength whiskies are going for significantly more than is warranted by this simple formula. Take a recent example, Angel's Envy Cask Strength. As noted by Tim Read, it goes for roughly double the price of the less potent version, despite having only 37% more alcohol and, according to Tim, tastes worse. Bowmore's 10 year old Dorus Mor, is roughly the same, going for at least twice what the weaker 12 Year runs, despite only having 38% more alcohol. There are exceptions to this trend, such as Old Grand Dad (32% more alcohol for a 27% increase in price) or Laphroaig (34% more alcohol for a 32% increase in price), but they are becoming the exception rather than the rule.
Adding another layer to this, higher proof whiskies also often drop the age statement found on their less potent stablemates. This has become quiet common, especially for sherry-centric whiskies from the likes of Aberlour, Macallan, Glenfarclas, Glendronach, Glengoyne, etc. In these cases it's fairly safe to assume that you're getting younger, and thus theoretically cheaper, whisky in the bottle, which should balance out what one gains in terms of proof. It's more difficult to quantify the appropriate price differential that should exist between these bottles, but it certainly shouldn't be broader than between two age dated bottles that differ only in proof - for instance, Glenfarclas 10 Year and the cask strength 105 edition that is roughly double the price.
Another common argument is that you can always add water to a cask strength whisky to bring it down to whatever level you happen to enjoy. To begin with, adding water right before you drink a whisky will be very different than adding it and letting the diluted whisky sit for a good chunk of time before drinking it. More than a few drops and the whisky can end up tasting excessively watery, instead of properly integrated. Which means that you're going to have to think ahead and decide how dilute you want your whisky to be. All of a sudden it's become a much more complicated proposition.
Additionally, the casks going into a cask strength whisky are likely to be different than those going into a bottle that has been proofed down. Some whiskies shine at cask strength but fall apart with even moderate dilution. The Thomas Handy rye I reviewed a while ago was actually worse proofed down to 45% than the standard Sazerac 6 Year which is bottled at that strength. Theoretically they're coming from the same stocks, but the Handy rye was genuinely bad at much less than barrel proof. To cite a more complex example, Macallan Cask Strength works great straight out of the bottle, rather well at 45% and 50%, and poorly at 55%. This suggests that the master blenders at distilleries choose some casks for their standard, lower proof expressions and other casks for their higher proof expressions. But one won't necessarily work as well for the other. Which is all to say that it's very difficult to know how well a cask strength whisky will handle being watered down.
None of this is to say that I think cask strength whisky is a bad idea. I've enjoyed quite a number of them and will continue to do so. But I think the uncritical valorization of cask strength whiskies is somewhat misplaced, especially if it leads distillers to overcharge for them, safe in the knowledge that the market will still eat them up. Diluting whisky isn't always about stretching supply - sometimes it will genuinely taste better with some water. So to answer the question posed in the title of this post, I don't think it's either wholly bad or wholly good - cask strength is simply another factor to be considered when choosing whisky, neither more or less important than any other.