"Based on true events" or "Ripped from the headlines" just means "the writer is unimaginative and/or horribly shallow". Bleh.
If you want to see the difference in action, look at the recent James Bond movies: Casino Royale and Quantum of Solace. Casino Royale, was a MUCH, MUCH better movie, even though the events were a little contrived (A super-high stakes international national security poker game? REALLY?!) because it was internally consistent due to sticking with the strictly artistic element. Quantum of Solace sucked--the plot wasn't just contrived, it was STUPID. You know why? They attempted to base it around something that really did happen when Bolivia went about "privatizing" their water delivery infrastructure in a criminally stupid way. All the international flair, mystique, and suave that makes James Bond, well, James Bond, were completely lost in a sordid little two-bit scam that could only have been dreamed up by someone completely ignorant of basic economics.
No. Even if the artist is an idiot, at least when they avoid things that "really happened" they still might pull off a semi-competent story.