I'm not doing well in an elective, its gonna bring down my average for sure. Is it worth it to drop it? what would grad school generally care more about, dropping the course (it would obviously show up on the transcript, and I would end up with 27 units this year) or having a lower average?

I think it's more worth it to just drop the course, I did the same thing this semester and last year too. Grad schools don't care if they see this cause on your transcript, it'll say "cancelled" and nothing else, which could be due to a number of reasons, not just dropping due to a poor mark. You'll have to make up for it later, probly in summer school, but summer schools not a big deal at all, so long as you can get to Hamilton in the summer. I'm not sure what the protocol for summer school at different schools is though. But yeah, no one will care if you drop it just do it by today! (its the deadline) otherwise it won't say cancelled and they will know you dropped it for a poor grade.