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I didn't see any facts about the mix to define the statement that it was Horrible. What I'm thinking is that, if Horrible was due to tone being bad, like missing lows, honky soundy etc, then, if it is a home-studio, it could be that they just can't hear the true sound of the mix, and will never-ever get there in that environment. In that case, you might be able convince them of that truth, and, for a fee, remix the tracks it in your treated studio. They won't feel bad and you get extra paid work.
If Horrible is the result of an over-clipped attempt at making it loud, then you can ask them to remix with more dynamics (less loud-added) before you can work with it.
And, as someone suggested, if the tracking is bad, they will need to start over. But, is it bad because their equipment is not good, or is it the techniques? Unless something changes, a redo won't help. If you wish to take on the work you could sugest that your equipment or your techniques could help make it better, and make more money.
So, I think the definition of Horrible is important to your solution and in finding ways to fix the situation without insulting them (unless they need insulting).
Ken
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