Are there historical examples of audiences drawn to a work that was "so bad it's good"?

Not to define what is and what isn't considered history, but I believe we can see two great examples in modern history, the digital era, on YouTube:

Justin Bieber – Baby, with 10 million dislikes (out of 20 million ratings), posted in 2010.

Rebecca Black – Friday, with 3.4 million dislikes (out of ~4.5 million ratings), posted in 2011.

Considering the growth phase of YouTube, I think it is pretty safe to say these are the first "generally hated" videos on the Internet. I am not sure if they are the videos with the highest number of dislikes out there, or the lowest rating in percentage (among most rated videos), but they are definitely on the list.

The book that leapt to my mind was A Pickle For the Knowing Ones (1848), by Timothy Dexter.

The book contained 8,847 words and 33,864 letters, but without punctuation and seemingly random capitalization. Dexter initially handed his book out for free, but it became popular and was reprinted eight times. In the second edition, Dexter added an extra page which consisted of 13 lines of punctuation marks with the instructions that readers could distribute them as they pleased.

This was one of many ventures Dexter approached with little skill but a great deal of luck.

This is a matter of taste. And "so bad, it's good" is an 'acquired taste'. As a more or less mass phenomenon it is indeed a recent one, although slightly older thatn the question presumes.

Tastes differ. Tastes develop. And not all people have the same opinion on what's good, and certainly not all at the same time.

It's also quite the difference to see an audience just mocking the artist or the product, or an audience genuinely enjoying "so bad it's good".

What's described in the question is are sleeper hits which due to their small and dedicated cult followers.

There is a cultural development in Western art to observe that in Shakespeare's time mob and queen went to the same theatre and watched the same plays, equally enjoing or loathing what they saw. While paintings and music were reserved to be created by the the financing from the upper classes. This differentiated taste became really solidified during the 19th century with avantgarde artists.

One such example would be van Gogh or impressionists, shocking the cultured elites and just provoking head shakes in the lower classes. It's that bad, it can't be art. In all cases it took quite some time until more people were convinced, "hey, this is actually pretty good". They took to their time to 'understand'. But that is then clearly a re-interpretation.

Homosexual artists like Oscar Wilde or Henry Scott Tuke were equally provocative and can in modern terms be decsribed as 'bad' in the sense of being kitsch or camp.

Plan 9 is terrible. There is no way around it.

But curiously, Plan 9 doesn't make the list in Bad Movies We Love:

Ask anyone who’s been to their plex anytime recently and they’ll tell you we live in a world polluted by Bad Movies. Occasionally, though, there are Bad Movies that separate themselves from the pack, special Bad Movies: those big- budget, big-star, big-director, aggressively publicized fiascos that have gone wonderfully, irredeemably, lovably haywire. We call them Bad Movies We Love. To rate a special place in our hearts and in this, our tome, not only did the movies have to be jaw-droppingly, astoundingly bad, they had to be fun bad—the kind of fun that means that, when you’re wandering the aisles at the video store looking for a good time, if you’re hip to these movies, you can’t stop yourself from yanking them off the shelves. (xvii–xviii)

For Ernest Mathijs, trash cinema has become important for the challenge it provides to reception studies in the ways the films’ reputation never seem to settle, moving in and out of favour. His example was the Harry Kümel-directed Daughters of Darkness (1971), a film ‘described as both a masterwork and rubbish’, and thus ‘an excellent example for the study of the reception of trash cinema’ (2005: 453). His conclusion was that the unfinished nature of the film’s reception paralleled a significant shift in film studies. Since its release

This needs seperation for the kind of trash Plan 9 represents:

‘trash’ has become a very different word in cinema studies. If it first referred to straightforward rubbish, it now carries a much more subtle and complex status. When, in a recent discussion of Kümel’s work in Sight & Sound, Daughters of Darkness is intro- duced as ‘commercial trash’ the word is used in a far less negative way. It has come to signify a particular kind of film, characterised by its openness to different interpretations, much more than just a bad film. The change parallels a change in film discourse, in which issues of aesthetic quality have become less absolute, more dominated by what Jeffrey Sconce has called paracinematic taste. (2005: 471)

One earlier example than Plan 9 would be the outrageously bad Marihuana (1936) a.k.a. Marihuana, the Devil's Weed by Dwain Esper which people watched as genuine propaganda and paranoia thrill. Watching it now can only be done for "oh my god how terrible, it's hilarious" just like the now 'classic' Reefer Madness and many more of the early exploitation films.

On the same level, or "every bit as demented as Ed Wood Jr" would by Denver Dixon, real name Victor Adamson also with some pearls on archive.org.

But this illustrates the difficulty in the sought after concepts here. For these differentiations in taste to develop, you have to allow for quite some time.

To not only look for fore-runners or very roughly comparable artists and movies, this whole concept of "bad is good" really only took off in the 1950s for movies.

In a review contrasting a series of French low-budget TV features about teenagers with a set of related but different American ‘Drive-In Classics’ that reimagined AIP films from the 1950s, Jonathan Rosenbaum dismissed the idea that the latter were based on B-films. In his account, in the 1950s teenagers with enough pocket money and autonomy led to a completely new strain of filmmaking and film-going: ‘For virtually the first time, “bad” movies that teenagers could feel superior or at least equal to became a significant part of movie culture’ (2016). For Rosenbaum, this was not the naïve ‘badness’ evident in the films of Edward D. Wood Jr., but the ‘more calculated and ironic “badness” of a Corman quickie’, though ‘only later generations, with their approximate grasp of film history and market distinctions, would call both of them B-movies’.

Quotes from
Guy Barefoot: "Trash Cinema The Lure Of The Low", Short Cuts – Introductions To Film Studies, Wallflower: London, New York, 2017.

Largely the same story is presented in Greg Taylor: "Artists In The Audience. Cults, Camp, And American Film Criticism", Princeton University Press Princeton, New Jersey, 1999.

The works of Amanda McKittrick Ros are an example of prose that was so bad it was considered entertaining for its badness.

One group who entertained themselves with her work was a group of British literary greats known collectively as the Inklings (J. R. R. Tolkien and C. S. Lewis were among them). Their main business was to share unpublished works of theirs with the others, for the purpose of critique and suggestion, but they attended to other matters as well. Wikipedia states thus:

Meetings were not all serious; the Inklings amused themselves by having competitions to see who could read the notoriously bad prose of Amanda McKittrick Ros for the longest without laughing.

English As She Is Spoke was so bad it was enjoyable:

English As She Is Spoke is the common name of a 19th-century book written by Pedro Carolino, and falsely additionally credited to José da Fonseca, which was intended as a Portuguese–English conversational guide or phrase book, but is regarded as a classic source of unintentional humour, as the given English translations are generally completely incoherent.

…

Mark Twain said of English As She Is Spoke that "Nobody can add to the absurdity of this book, nobody can imitate it successfully, nobody can hope to produce its fellow; it is perfect."

Florence Foster Jenkins, known as the world's worst opera singer. "No one, before or since, has succeeded in liberating themselves quite so completely from the shackles of musical notation."

Despite (or perhaps because of) her technical incompetence, she became a prominent musical cult figure in New York City during the 1920s, 1930s, and 1940s.

At the age of 76, Jenkins finally yielded to public demand and booked Carnegie Hall for a general-admission performance on October 25, 1944. Tickets for the event sold out weeks in advance; the demand was such that an estimated 2,000 people were turned away at the door of the 2,800-seat venue. Numerous celebrities attended, including Porter, Marge Champion, Gian Carlo Menotti, Kitty Carlisle and Lily Pons with her husband, Andre Kostelanetz, who composed a song for the recital.

The poet William McGonagall (born March 1825 and died 29 September 1902) is a famous example.

McGonagall has been lampooned as the worst poet in British history. The chief criticisms are that he is deaf to poetic metaphor and unable to scan correctly. His only apparent understanding of poetry was his belief that it needed to rhyme. McGonagall's fame stems from the humorous effects these shortcomings are considered to generate in his work.

[...]

McGonagall constantly struggled with money and earned money by selling his poems in the streets [...]

He found lucrative work performing his poetry at a local circus. He read his poems while the crowd was permitted to pelt him with eggs, flour, herrings, potatoes and stale bread. For this, he received fifteen shillings a night. McGonagall seemed happy with this arrangement, but the events became so raucous that the city magistrates were forced to put a ban on them

His popularity went up and down. He was apparently a cult figure in Edinburgh at one point, but he died penniless.