The second part responds to the idea that if an artifact was created by someone who is bad (whether by the standards of their time or ours) or is the fruit of a bad ideology or is somehow enjoyed by bad people then that artifact is itself bad.
Prevailing bullshit, but bullshit nonetheless.
Basically agree with everything you've said here, but not this. Restaurants (and music and movies) are entertainment products. If someone feels uncomfortable lining Ken Friedman's pockets, or no longer gets any pleasure from listening to "Bad", or Kevin Spacey's presence in LA Confidential breaks the spell of the movie, are all unrelated to whether the "art" is good based on some objective, context devoid, standard. I don't think that anyone (smart) is saying that the artifact is bad, it's that the artifact is no longer enjoyable because of the context, or that the ethics of financially supporting the person producing the artifact is questionable. The bad behaviour means that the entertainment is no longer entertaining.