Hmmm I never really flesh out "bad" songs, but I do toss around a lot of ideas in my head. Probably only a third of those get written down. And probably out of those written down, maybe 20% are "good" to my tastes. I'm sure some are actually lame and I'm sure some I think are lame other people would really like, but that's how it goes when it's just you
I was watching Jools Holland interview Paul McCartney on his show the other day, and he asked Paul what his favorite songs he had ever written/co-wrote were. Paul started naming stuff like Eleanor Rigby, Blackbird, etc. Then he goes, "Oh yeah, Yesterday was a really good one. I dreamed that one. I literally dreamed it, woke up, and wrote it down."
I was like "Paul you bastard!!" I wish I could dream up beautiful songs like that. Some people get all the luck!
I get alot of ideas before I fall asleep, or when im waking up in the morning. Im not Mccartney, but you should always keep something to record nearby. I have dreamed songs but then couldnt quite remember them when I was awake. The mind is free from distraction during these times.
Mccartney originally had the lyrics "Scrambled Eggs, Oh, my baby how I love your legs", good thing he changed them!