I think that if you're playing for yourselves in a rehearsal space then play what makes you feel good. If you're getting paid by any type of venue then you should, IMO, play what will get the punters dancing, drinking and staying in that bar as opposed to going elsewhere. You've crossed a line and become the entertainment, you have a duty to the venue now.
It's not a binary thing, Brown Eyed Girl does not equal rubbish. In a previous band it was a staple of our set, played at a slightly higher tempo with the distortion pedals engaged. Obscure tracks do not equal definitely empty dancefloors either but let's be honest, if it was easy to get this balance right everyone would be doing it. My past is littered with surefire, great dance floor filling songs that didn't land with an audience, and throwaway fillers that ended up staying in the setlist because they hit the spot.
I'm reminded of a gig I did many years ago. Our band's USP was taking pop, country, rock, show tunes etc and Punking or mashing them up, so tunes everyone knew but played in a different way. During the break the gig booker walked up to us (not so much of a walk, more of a squeeze) and said "thank **** for you lads. We had *A Whitesnake Tribute Band* in last night. No ****er knew anything they played, I didn't and I'm a fan. The place cleared by half time and the crowd you've got has saved the weekend "
That band had a massive reputation mainly because the guitarist ran the local music forum so everyone blew smoke up them, they were also on significantly more money than us, the gig booker told us the numbers. We never played for the lower fee we had asked for that night again!!