Well stated summary of the problem, but I don't understand why it is overblown. The human expression in art and the skill that it took are where it draws its value and beauty. If you change art so fundamentally that it reflects neither of those things, it is the end of art as we know it. It is not just the artists who are speaking out against it but people who love art. That's not everyone, which is understandable.

Edit: I think I misunderstood your intent, my original comment did raise this question. It happens that I'm sympathetic, but I thought the original post was overgeneralizing. I think people actually like generated images and they have their practical uses, they just can't take the place of art.