I still have to supplement with electric and propane heat in the winter but they look better than window units from the outside.  

Some will not raise the rents of good tenants preferring to supplement their rent in the belief keeping them is preferred over charging full market rent with the risk they will move.

Stay under market if you have a undesirable property otherwise why would you supplement your tenants rent.

However, today I received a supplement list from my tenants, and it states all bedrooms have "Lots of marks, dents, and holes & scratches on all walls".

I can however say that the scenario you outline is not a wholesome one - agreeing to one rate and then paying some kind of supplement on the side.

It includes but is not limited to monies derived from Social Security benefits, supplemental security income, unemployment benefits, other retirement programs, child support, the Aged, Blind or Disabled Cash Assistance Program, Refugee Cash Assistance, and any federal, state, local government, private, or nonprofit-administered benefit program."

Those are the owners that professional landlords prefer to take advantage of purchasing at a low number, value of income property being determined by NOI, and then bringing the rent to market rate.If you are a hobby landlord, which it sounds like you are,  then supplement their rent at whatever level you feel comfortable with.

Scary.I am surprised that I didn't see anybody suggest that the tenant just go get themselves a window unit to supplement the central A/C.  

Will he have something to supplement their income until he goes back to work?

By the time you get there, you'll know more.And I actually made good supplemental income in college from sitting at poker tables, but that is a whole other story.