Just to confuse the issue… it can also be mass produced (think of mugs sold in supermarkets). The printers that I worked for had a 1-mug press, a 5-mug press, and a small ‘oven’ that could take 12 mugs (that we used for companies that wanted a small run of promo material). We never made more than 50 items - but each of them would still need to go through what I have previously explained. I am just assuming that other small printing companies would operate with a similar set up. Hobbycraft sells mug and heat presses, so dye sublimation is definitely on the up especially for the small entrepreneur.
However, to go back to the original point - I agree that original photography should be used, especially for the main photo, but that a print on demand person/business could use supplementary mock ups (and to state they are mock ups) to promote the possibilities of their items.