> Just proceed to eat some splinters, then? What is the good etiquette way to handle low quality el-cheapo chopsticks?

Well first of all the chopsticks are joined at the non-eating end, typically. So the splinters would be bothering your fingers more than anything.

It's rude because it insults the host, in a way. Anywhere that would care about you doing it should not be giving you the cheap chopsticks in the first place. If you're in a place that gives you them, they probably don't care about you doing it.