it seems that when everybody in the room is having a go, the balance shifts towards the 'dire' end of the spectrum

I think it depends who's in the room. I've heard a lot more GEFF and practising-in-public at my local 'open stage'* club than at any of the singarounds I've been to. This may sound silly, but I think there's something about getting up in front of people that attracts performers whose enthusiasm outstrips their talent - it's your fifteen minutes of localised fame.

*Not an 'open mike' club as no PA.