What is the meaning of proverb A beautiful bird in an ugly cage?

Who knows where you encountered this phrase, but there is no such proverb. It seems to be a reference to the familiar image of a bird in a gilded cage, indicating a kept woman as the epitome of unhappiness amid the trappings of wealth, which comes from a popular song by that name, a big hit in 1900, by Arthur J. Lamb: Her beauty was sold for an old man's gold,/ She's a bird in a gilded cage. This would mean the opposite of the actual phrase in your question, about a beautiful bird in an ugly cage, which - if someone really used it metaphorically - would merely refer to an unworthy container for a thing contained. Inane and brutal at the same time.