Need art be beautiful, or has this become an outdated notion?
Yes. Art must be beautiful. And who could argue?
I'm in the middle of writing a paper on this very topic and I've come to the understanding that art means beauty, and in the same way, beauty means art. We create art to express beauty and emotion, and such words in the context of artful thinking express that of utmost aesthetic pleasure.
We wouldn’t generally attribute something ugly to being a fine piece of art, unless it is something terribly beautiful, or beautiful in such a dark way that it becomes beautiful, almost like the notion of what the sublime pursues. This is what Oscar Wilde is trying to resolve in "the Picture of Dorian Gray," where he eventually concludes, "all art is quite useless." I'm beginning to agree.
Let's all relax. It's just art.