Like you I love to look at code and IMO that's where OSS (Open Source Software) shines because people contribute to OSS when they feel passionate; so that should be a good indicator. I also get candidates to submit coding puzzles and later get them to change it while I am looking over their shoulders!
RE "I need you to be able to at least do an acceptable job regardless" Until recently I thought I can always write awesome code; but it's not until we're brought down to our knees that we appreciate how personal issues could impact everything in our lives.
So, what is good code? Testable and well-tested, modular, isolated, easy to read, robust, performant...
What is terrible code? Well, the opposite of that, but generally there are some key indicators - code that breaks badly in edge cases, code that is impossible to read, code that entangles itself in a lot of other code, code that is hard to test.
So, mediocre code would be something that has some of the properties of good code, but is missing a few of the more important ones... maybe the tests aren't fully baked, maybe there are some inefficiencies, maybe it's a little harder to read than it could be, maybe it's not quite as isolated from the rest of the code as one might like.
The difference between mediocre and bad is the number of subpar things and their severity. If there are no tests, that's bad. If the code is horribly entangled with unrelated code, that's bad. If it's N cubed time in a place where we expect to handle large amounts of data, that's bad. If it ignores several common edge cases that will have really bad effects, that's bad.
It is subjective, but it's not entirely opinion, either.
Also, if you don't try to keep your developers happy when something happens, even good developers, they can easily jump ship to another company that does & maybe even get paid better - health issues are nothing to be trifled with, they happen to everyone & good companies will give time off for such for good reason. Even the military with its notorious overworking of people makes sure people have ample time off to recover from illnesses before making an action.
It's by far a pro-developer's job market - I'm looking at about a $70k+ raise in income + stock options over the past 6-7 months with little more than 1 year of experience (from entry level pay & no CS classes in education). If craziness like that can happen, you should beware pushing your developers in the wrong ways since jumping is an attractive option.
This reminds me of the fundamental attribution error[1]. We tend to attribute the motivation behind our own behavior to context we are in, whereas we tend to attribute the behavior of others to internal characteristics.
1. http://en.wikipedia.org/wiki/Fundamental_attribution_error
Seriously, though, although I think OP overstates it a bit, the point is a good one. When we are paid to code, part of the deal is that we can be required to produce code that is arbitrarily bad, as judged by our own lights. I've certainly been in situations where I was compelled to commit code, in my own name, that I felt was atrocious. You might argue that I should have resigned instead, but when you have a family things are not that simple. (Yes, I did leave with all practical haste, but at my level this can take a while.)
I do judge programmers somewhat by their commits. But I am careful to consider the context, especially parts that might not be immediately obvious. If you see something that looks bad, though, don't just ass. Instead, ask the person about it. What's their opinion of it? What's their opinion of the project as a whole and how it was run? And listen carefully, as standard practice (at least in the US) is to avoid disparaging prior work situations.
Nonono, that's how we judge managers and executives. We judge programmers by their hair.
I judge a programmer by the contributions he or she has made to various open source projects. Now that sounds like judging by code, right? Well only partly. Other things that matter is how many projects someone has committed to, what the people of the project teams say, etc.
The thing is I can't know the context looking at the code. What I can do is look at how successful the open source projects are and what their co-committers have to say. Now, usually the co-committers will say something positive, but what they say is important.
Recently I had to hack the Django test runner, so I could use a copy of my prod database. I hacked it enough to do what I wanted, but I know that releasing that would probably cause people as many problems as it solved, giving them false hope in a solution that worked on my machine with my setup.
I had initially though it would be something the community would want (having googled around to get a solution), but the fact is, to do it an a quality way (one that I would expect to solve more problems than it creates for the average user) would take significantly longer. I don't wnt to pollute good quality projects like Django with crap hacks. I will however be happy to write a blog post or stack overflow answer explaining what I did and how someone else can do the same - with the full understanding it is a bit of a hack, and may or may not affect.
(I have put in the occasional bug report. Am I being too much of a perfectionist for the open source community, assuming that crap code is not better than no code?)
True open source software development is about sharing code because you want to do so. It's not about crafting reams and reams of crappy JavaScript or Ruby code just to be able to claim to be a "prolific contributor", or to brag about having made a large number of GitHub pull requests.
Writing closed-source code that solves real problems is more valuable and important than writing open source software that only serves to stroke one's ego.
(To be honest I've probably lost track of projects that have taken a one-line bugfix/fixup, and if you put me on the spot I'd probably struggle to recall even the biggies.)
I can recall when using mixed case in your FORTRAN IV Hollerith statements was considered a bit flash.
"it works" is actually a very small part of good code, since implementation is usually dwarfed by maintenance and extension.
Note, none of what I mentioned is about clever or "purty" code.
Definitely, you can and should tack on some personal information about the circumstances around the code you show to people. I have stuff in github that is half-baked. No big deal. Instead, I say "here, this is an example of my work that I consider to be high quality, and is an example of the code I would write for you if given the chance. That other repo is just some stuff I was messing around with, and I never fully put in the time to make it correct, because it was just a proof of concept."
And as for personal issues.... sorry, but this is life, and you might have those when you're working for my company. And I need you to be able to at least do an acceptable job regardless.
I'm hiring a coder. I'm going to look at your code. Just like if I'm hiring a cabinet maker, I'm going to look at his cabinets. If he says "sorry I was tired that week" and shows me crappy cabinets, I'm going to worry that he might be tired on the week he builds my cabinets.