Argh tone on the internet- I'm not mad or anything, just wanted to state my opinion since ours are so wildly different, and it's interesting that all of these ideas will have to coexist in gaming spheres.
Speaking strictly as a player, this is the opposite of what I would want in a game. The...intention, I guess, is what I want when I play anything story-driven. Chatting with ai on purpose feels upsetting to me and I think I would feel tricked if I encountered it as a par-the-course kind of thing (knowingly or especially unknowingly) in a game.
But- I haven't encountered it yet, and perhaps it could really, really work!
Speaking as a professional artist myself, I'd wager that many of the responses you've run into are emotional ones. Supporting oneself as an artist was already difficult, and AI generation is an astoundingly powerful tool. For a long time there was a sense of financial security in quieter/grunt background and asset design work such as the WotC backgrounds in this situation. WotC in particular was touted as "one of the companies that actually pays artists to make neat things" in fantasy art circles, and so their fans and artist clients (often one in the same) feel betrayed.
I'm personally a sad-bitch about it because my peers and I have been posting art for one-another and fans online since 2002, our work was scraped, and now people can click a button to ape the look of all of our work without having run across it organically, knowing our names, or being able to, like, say hello to us. I really don't mean that out of self-importance or ego- the community I grew up in online was all about discovering working artists by word of mouth this way, and getting to know them. So it's a weird (albeit unintentional) dismantling of a community and "a way that was", so to speak.
More practically one of my specific worries regarding AI generated images: Illustration in the literal sense of the word means 'to illuminate', to make clear'. Think along the lines of technical illustration- biological in my case, but this extends to mechanical parts, manuals, diagrams, medical books. These are situations where clarity is seriously important, and I feel like the deluge of generated images (and the general public's lack of information about how the image gen works and how to decipher them) will cause harm.
Hopefully that wasn't too much of a ramble. 🫤 TLDR: It isn't necessarily immoral, but people are emotional, it's a big change, and it's happening really damn fast.