It depends on the situation. There are cases where the organization wants to do everything and you need a leader who will force them to prioritize. There are cases where you have several internal groups with competing objectives and need a leader who can get them to cooperate. There are cases where everyone is already moving in the right direction and you need a leader who will take all the stops out. There are cases where bold and perhaps unpopular decisions need to be made and seen through.
If you have a CEO who is currently stingy about making process improvements that aren't sexy and is focused largely on office politics and that's not what the company needs at the moment, promoting someone who has been down in the trenches is a great option. Conversely if a company is bloated and needs to tighten its belt to survive, you might want someone who can look at it as dispassionately as possible. Really you can't look at it in terms of good or bad ceo, but rather appropriate or inappropriate.
