Was the final stand-up meant to be bad?

taste in comedy is very subjective, of course. I thought the material Rupert pupkin delivered was just "ok" at best. I think Scorsese wanted it that way, so there would be some ambiguity as to whether pupkin had any actual talent or not. (pupkin's material could have easily made it to a television shows, yet this says more about television than it does about pupkin's "talent." this is probably another layer of satire that Scorsese wanted to explore.)
Jonathan Becker

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It's an interesting, somewhat ambiguous question. I'm on your side, though.

I think the reason Scorsese didn't let us hear his material earlier is that we were supposed to assume he was terrible, and then be surprised that he actually wasn't that bad. If you go back and think about what the "secretary" said (I think she was something higher than this, and that you may have ascribed this to her out of unconscious sexism, sorry to say), she assured him that he had a lot of potential and so on. We in the audience assumed this was just empty flattery to let him down easy; but in retrospect, it may well have been sincere.

As for the cop (FBI agent), I think he was grumpy about the fact that this kidnapper had been able to use leverage to force him to not only let him appear on TV, but ferry him to a bar and so on. Along with his sour mood, he may not have had much of a sense of humor.

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It was bad, trust me. The material was OK I suppose, if delivered properly with good timing (exactly what he is told earlier in film). However Rupert's final act the way he did it was utterly cringe.

I think so. The woman who was the screener or talent scout gave him a pretty accurate critique. Some of the material was OK, but it needed work and he needed some practice to improve his delivery.

At the bar, no one was really impressed by the jokes, just that they'd seen him on TV.

I think the final scene of Pupkin getting his own show was one of his fantasies. The movie was about fame and how obsessed many people are with it, so it's possible that his set on Jerry's show and the attention he got because of it was enough to get him a talk show.

I think it was meant to be ambiguous.

I thought it was very clever that the stand-up routine was OK but only OK. Like others have said in this thread, people were expecting it to be terrible and for him to completely bomb, but it was better than that.
At the same time, if he'd tried that same routine in the clubs or at an open-mic event, it might not have gone down as well. The studio audience had the mentality that 'he's made it to this show, he must be good', and that, along with the general feel-good atmosphere for the show, had them laughing harder than they would have had they seen this routine elsewhere.