If you look at D1 Sim-coached teams, you'll see that some of the walk-ons look like generated recuits, rather than generated walk-ons. I took over UNCW a long time ago and only had 2 scholarship athletes that were worth keeping, but there was a walk-on guard that I liked! (Blue in a couple core categories, black in others.) Of course, I couldn't offer him a scholarship and then keep him as my 3rd player, but he would have been a much more useful player to have kept on.
I still feel that an incoming coach ought to be able to extend a scholarship offer to a walk-on before he disappears. On the other hand, I think there would be unintended consequences to making walk-ons too much better. You'd be giving a further incentive to coaches to take walk-ons. That would really distort the recruiting market. I like Sim-AI teams getting those guys as walk-ons, but not human coaches.