A distilled model does in four steps what its parent did in forty. That is where "turbo", "lightning" and "fast" modes come from, and the speed is real.
What is traded away is usually variety and fine control. Distilled models tend to converge on a narrower range of outputs and respond less to guidance settings, which is excellent for volume and limiting for exploration.
The production use is straightforward: distil for proxies and exploration, use the full model for the frames that ship. Mixing them within a set is a drift source.
Are fast generation modes worse?
Not worse, narrower. They produce less variety and respond less to guidance, which is a good trade for proxies and volume and a bad one for a hero frame.
Can distilled and full models be mixed in one set?
Not without introducing a visible difference. Use one for exploration and the other for delivery, and do not interleave them.