Is the r7 260x bad or is my athlon x4 750k bad?

Your CPU the problem. If you go to a low end i5 you'll be well matched. If you grab an i5-4690k you'll be set for a while and have plenty of room for upgrading GPU later.

Right now you are locked by game code for underlying systems, messing around with graphics will yield limited results. If you upgrade the CPU, you will see improvement in frame rates. if you aren't CPU locked, you can boost your frames by turning down graphics. If you are CPU locked, it's hard to get performance increases.

Depends on the games & whether they're CPU- or GPU-dependent.

Right now, to see if your CPU is bottlenecking your GPU, check your FPS as you change quality settings. If there's no change in FPS between Low & Ultra (or even if there's no change between Medium & Ultra), then your CPU is bottlenecking your R7. If the FPS changes, then you could benefit from a better GPU.

The direction of upgrade depends on the rest of your equipment. If you need a better GPU, then the best upgrade without updating your PSU would be maybe a GTX 750Ti. Alternately, if your motherboard has an FM2+ socket, you could replace the Athlon with an A10-series chip, which would allow you to CrossFire the discrete R7 with the A10's onboard R7 for a performance boost.

If your CPU is holding you back, the A10 is a possible way to go (to also gain the CrossFire bonus). However, if your current GPU is fine, then consider replacing the 750K with the 840K. It's slightly faster & performs better than the 750K, plus it's fairly inexpensive. And its TDP is slightly lower (95W vs. 100W).

Beyond that, any kind of GPU upgrades will require a PSU upgrade (for example, the R9 270 would be even better than the 750Ti, but you'd want at least a 500W PSU, if not 550-600W). CPU upgrades, on the other hand, will require essentially a rebuild, as you'll need a new motherboard & CPU.

Edit: Almost forgot. Your current CPU should be unlocked, so if the CPU is truly holding you back, depending on your motherboard you might be able to overclock it to boost the performance somewhat. You'd need a new CPU cooler (air should be fine) at a minimum. The same thing would apply if you went with the 840K (again, an unlocked CPU).

But, it all depends on your budget. If you're limited to maybe $200 USD, you're looking at maybe a GPU or a CPU upgrade to continue using the existing motherboard. Going to Intel, or even trading up to an AM3+ CPU from AMD, will require a new motherboard, CPU, & probably PSU, which means you start running into maybe a $300-400 USD budget.

Nothing is a problem. That x4 is alright, and it matches with the GPU. Anyone telling you that you need to upgrade to an i5 just to use the R7 260X is either joking or completely uneducated. However, if you're planning to upgrade to a better GPU soon (i.e. a GTX 970 or R9 290X), it is a good idea to upgrade to a new CPU.

Its not the CPU, I currently run an Athlon x4 750k with a 7970, why, because im in between builds, but it works, and I can play games, most maxed out, the R7-260x is no way gonna max out a quad core anything, its just not that powerful