This just seems like vandalism. If the original billboards truly are "illegal" (which I'm skeptical of), it is a matter for the city government, not a bunch of "artists".
They are. It's called "flyposting". http://en.wikipedia.org/wiki/Flyposting
There are some people who actively work to get illegal billboards removed: http://illegalbillboards.org/ http://illegalsigns.ca/
(I'm assuming here that the original advertisements were placed with the permission of the property owners. Otherwise the placing of the initial advertisements was vandalism, as is replacing them with something else.)
Week or two later, and they're covered in these cheap poster ads.
Whats really gross is when an ad agency uses a "street team" to carpet bomb every available surface.
I also provide a bulletin board for public use in my establishment. I regularly have to remove the posters of people who put up ten or more and cover up other peoples flyers.
I also remove the flyers that people put on my front windows, the bathroom mirrors and even tabletops.
So really I see this issue as exactly the same as managing a message board. Encourage good content and delete spam or your board becomes a ghetto with a lousy signal to noise ratio.
As far as the artists go, whether they are better or worse than the ads is a subjective decision. If anything they are at least creating a dialogue which is worth something.
But, I don't live in a city. If warfangle is right then I guess not.