Any guitar manufacturer, or quality woodworking operation of any kind, who is not separating their wood based on appearance is just being lazy. If you have that much wood coming in, you are buying in large lots, with most of the boards being sight unseen. You are obviously going to separate it with your own in-house grading process. That's just how any woodworking works, really, regardless of the scale of the operation. You mark most stuff as general purpose wood, and you pull out the best and the worst of it for specific purposes.
That said, it doesn't necessarily happen 100 percent of the time, or on an extremely strict basis. I have seen beautiful pieces of flame maple accidentally end up on Mexican Fender necks. And I believe there's a forum member here who discovered that his alpine white Les Paul Custom was a flame top underneath! On the other end of the spectrum, it's even more common to see relatively plain looking pieces of wood on high-end guitars – you're just not likely to see an exceptionally ugly piece of wood being used there. What most likely happens on a large scale is that, rather than super nice pieces being held for super nice guitars, pieces of wood that have particularly ugly grain, or other cosmetic problems such as dark streaks/spots or the like, are held for opaque finishes.
All that being said, it doesn't make a damned difference in terms of tone or structural integrity. (If anything, highly figured wood can be less stable than plain-grained wood.) Therefore, I would say worse looking pieces of wood, not simply lesser quality wood.
