True art pushes boundaries; it makes us look at familiar things in unfamiliar ways. Accordingly, as you have pointed out, JWs are VERY uncomfortable with artistic expression beyond Thomas Kinkadian sentimentality. It's like they're into realism with a vengeance, only a realism that conforms to the "Christian TV Guide:" "Whatever things are chaste, whatever things are well-spoken of, what virtue there is..." etc. (I forget the scrip). Anything that might not exist outside of "reality" (like blue-skinned avatars and vampires that sparkle) are demonistic.
OK, OK, those 2 examples admittedly don't fit the definition of "art." But I've wondered the same thing, long ago--what art would exist in the JW paradise?