For example, in Karate Kid, neither Ralph Maccio nor Pat Morita knew Karate, whereas in classic Hong Kong Kung Fu Movies, everyone knew how to fight.
Which approach would you prefer, when making a movie?

I would choose the latter approach. While you may get worse acting, it give you more freedom in regards to the core of the movie, the action. You have no worry about shot composition or post production when it comes to the visibility and discernability of stunt doubles, you are not forced to mask your actor’s inability to fight, with close-ups, shaky-cam, or rapid editing, and you can do more complex choreography and long, wide-angle takes that make the action scenes more clear and exciting.