I do scrap the bad, for the most part.
My then 18-month old DS had Craniosynostosis and had to have a 6-hour surgery and 5 day stay in the hospital. It was horrible for him, he face bruised, his eyes were black, and his very visible surgical scar was across his head from ear to ear. They shaved part of his hair, and the scar just looked gross, but it's in the pictures. I did an 8x8 album of just his surgery. Most of it is journaling, but there are pictures and most of them aren't pretty. It was a big event in his life, and he looks at the album fairly often (he's 4 now). It was hard to do the album, but at the same time, I wanted him to know what he went through. I have shown it to one other parent of a cranio kid before her dd's surgery.
I took pictures of my wrecked Jeep, but I didn't end up putting those in the album.
Steph