I agree. Having a workshop with no lathe is a bad situation and any lathe is better than none. I agree with LXCam, a good machinist can make useful items on one of those 7x10s, it just takes longer. Sometimes a lot longer. I have a fair amount of experience on real industrial lathes, and I know how much faster and easier they can make good parts. I would still take a 7x10 versus no lathe at all. As others have said, you have to know the machine's capabilities and work within them.
The tricky part is that the 7x10 or 7x12 lathes are priced and marketed as a beginner or starter machine, but I think it would be frustrating to start learning on one with no prior experience. Like learning on a cheap, barely functional tig welder, it can be hard for someone just starting out to tell if the bad results are from their lack of skill, or from the inadequacies of the machine.
*One advantage of starting on a cheap 7x10 is that it can't possibly rip your arm off.