Can good letter of recommendations offset bad GRE scores?
Disclaimer: I am a current graduate student and my experience is limited to being the student representation on the graduate admissions committee of my program.

One of my advisers always reminded me of the following principle:


  GRE scores will not get you in but can keep you out


What does this mean? GRE scores by themselves will never get you admitted into any program worth its salt. However, they do act as a nice way of filtering candidates, especially in schools which received hundreds of applications for its programs every year. 

Once you make the initial GRE/TOEFL filter, you are good. Your application will then be vetted on the basis of academic achievements, research, statement of purpose and letters of recommendation. Ergo, if you are removed at the initial stage by virtue of your GRE scores being rather low, then chances are, that nobody will even look at the rest of your application.

However, if your GRE scores are bad (but not that bad) then your good LORs might serve you better in the later rounds. 

Of course, for quantitative oriented programs (like math), you might be expected to get a perfect (or near perfect) GRE Math scores and respectable Verbal scores.

I hope this makes the process a little clearer.