Is it possible to do a state of the art paper with less accuracy than previous paper with 100 accuracy?|
Since you are aware of the other work you should report it. But you should probably also try to verify its claims. 

Whether your own work is worth publishing or not depends on some things. To be valuable, it needs to advance the state of the art on some dimension and accuracy is only one. If you can achieve "really good" results in half the effort/time/cost, you probably have something worthwhile. It might make the difference between something that is feasible or something that is not. 

But it would be a serious breach to ignore the other work.