THESIS: The worst offenders, for TG-16, are easily eclipsed by HORRENDOUS ART on other North American platforms that co-existed with our beloved TG-16: NES, SMS, GENESIS, etc.
Overall, maybe, but if you compare the box art year by year, the TG was behind the times. Most box art sucked in the Eighties, but the TG is remarkable for consistently blowing chunks well into the Nineties.
The SMS had the worst art of any system ever, largely due to Tonka's games released in '86-88. By '89, Sega moved away from lone soccer balls and clip art bare feet and begun to use decent(ish) centerpieces. The white checkerboard still made everything look bad, but the background art slowly expanded and got better until the system died in '91.
The NES was unusually good for the Eighties. Using pixel art for the early games really saved Nintendo from the embarrassing first steps Sega went through. The uniform consistency looked good and the art never looked worse than the actual game. There was some bizarre stuff like Mega Man (which I liked), but the third-party art was good too. I bought a lot of used NES carts at a secondhand store in '89-90 and there was enough good label art to make my ten-year-old self very indecisive. I spent half an hour trying to choose between Metal Gear, Legacy of the Wizard, Tiger Heli, Trojan, Dragon Warrior, and Godzilla one day.
I'm not a Genesis gamer, but IIRC, the early Genesis titles looked pretty good. There were a few duds like Sword of Vermillion, but black boxes really helped.
The TurboGrafx... I don't know where to start. Looking at the wall in Toys R Us was like going back in time five years. As excited as I was about the TurboGrafx, its games didn't look nearly as cool as the NES or Genny. A real leap of faith was required to buy an unknown game. I would never have considered games like Dungeon Explorer, Ys III, or CF2 without some serious convincing of EGM and VG&CE.
The small library made it worse. While the NES and Genesis had a continual flood of new games to sweep the occasional bad art off the store shelves, the TG stagnated and never had enough releases to get the launch titles off the rack. The vidpro cards for Takin' It to the Hoop and all of those hideous orange spine games were still burning themselves into my memory when the few stores that supported the TG started clearing their stock in '92. By the time TTI had good box art, nobody stocked it.