I guess it depends. I have a friend who has dairy cows, grass-fed, very well cared for. He names each one and hates to slaughter them, but when they are done producing, he does take them to the slaughter house. I bought a quarter of a cow from him a few years back, and it was excellent. It did have a hint of gaminess redolent of venison or lamb, but it was delicious.
You are misinformed. I regularly eat our retired dairy cows. They taste absolutely excellent, but they were raised on pasture and ate top quality feed.
Dairy cows from commercial confinement dairies are a different matter. They eat almost exclusively grain and develop horrible health problems.
Yet the same can be said of any meat produced in a CAFO, when compared to that produced on most small farms. Garbage in, garbage out.
My guess is that they have specialized breeds and how they're raised and fed and such, so that dairy cattle wouldn't make for good beef and vice versa. They probably do use them somehow, but maybe for dog food or some similar use.
Presumably, after a cow is done being used for milk, it can then be sold for meat.