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Well, if I lived next door to a foreclosure, I would appreciate almost anything they did to spiff up the property. Nothing worse than keeping your own house up, only to live next door to an ill-kept property.
It's hard to call it unethical if it's disclosed... and if it's not, it would be easy to detect. How is painting a dead lawn any different than painting over a water stain, plastering over a crack or cleaning off mold? All are camouflaging something undesirable. It's the homeowner's responsibility to disclose known problems, hidden or not, but it's the buyer's responsibility to inspect. How could they not tell?
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