I disagree, but even if I let you have that point, what about Cariou v. Prince? If taking a photograph of someone else’s photograph is legally considered a novel work, then how does AI differ?

https://en.m.wikipedia.org/wiki/Cariou_v._Prince

Well, apparently, it differs in the sense that people don't call the final product art.

They do.

https://en.m.wikipedia.org/wiki/Appropriation_(art)