Without a doubt, Dewey is my favorite on aesthetic theory. But your quote is a good example of his main point, art depends on context of the object and the user/viewer/"experiencer" of the object. While there are those who feel the contrary, in our current culture, a bicycle is not art. It "could be" art, but it isn't. And most definately, the 1,000 critics in NYC who are the world's arbiters of what is art or not, would not consider a bike as art.
One of Dewey's central points is that the apparently vast gap between "art" - as a "special" realm with it's own, set-aside special venues - and the "everyday" is a cultural construct that glorifies one while tending to denigrate the other. And it is of course in the professional interest of the many art critics to sustain that gap. But if we're too quick to assign objects to the categories deemed culturally "correct" - e.g. "art" and "craft," then we're likely to miss or fail to appreciate the fact that art also permeates (or at least has the potential to permeate) the everyday. Not to say that art museums aren't sites where the richest experiences can be had. But this should send us back into the everyday world with an enhanced experience of our everyday surroundings and the objects in them - including a heightened sense of the artfulness with which those objects are conceived (or a sense of the extent to which this artfulness is lacking). Dewey is interested in thinking "across the grain" of trite dichotomies like "art" vs. "craft" in order to foster fresh seeing and experiencing. Like Augustine discovering the divine everywhere in the created world, we should be finding our workaday world rife with artistry, and interacting with it artistically. The museum and the home should be kindred places, and not positioned on opposite sides of a gulf, with one side the subject of admiration and the other of resignation.
Which is why "arting up" bikes is unnecessary. It attempts to remove bicycles from their usual realm of experience in order to "elevate" them to some more glorified aesthetic status. Or to juxtapose bicycles with commonly accepted art concepts in ways that come across as contrived or strained.
I'm more interested in opportunities to see how bicycles are conceived, made, and enjoyed "artistically," in the sense of how the maker thinks through the process, chooses materials, interacts with those materials in a refined manner, guided by years of muscle memory, etc. Not to say bicycles are necessarily art in the same sense as the paintings in the Frick - because they're not conceived as "art" in that intentional sense, and they're of course primarily functional and secondarily aesthetic. Their aesthetic enjoyment will therefore not have the same yield. But the "art" is already in the bike. It doesn't necessarily have to be "tacked" on in a way that, in my view, unhelpfully sustains that "art" vs. "everyday" duality.