There's alot of good stuff on the market now... what happens when a bourbon in the barrel is simply foul (personal taste preferences excluded)? Of course it could be gently mingled into a low end brand (would anybody really notice?), or it could be redistilled, I suppose. No smartypants answers like "it goes into fighting cock" or such.
Looking at it another way, what happens when a reputable distiller like BT discovers a whole warehouse rack of bad bourbon?
Or is the distilling science so well mastered, that there is simply very little room for error?