I think it's great for illustrations, pretty good for music, great for code, not very good for writing, rubbish for video except perhaps subtle animation. Can probably be used in some creative fashion.
AI art is basically an extension of writing. The most appropriate art is that which reflects the vision of the author and not the artist, and AI is usually closer to it if the author bothers enough. It is of course important to control for the quality so that it doesn't look like ChatGPT art. But a lot of AI art looks just fine, certainly a lot better than the amateur art a la Spiderweb or the even more soulless art a la Warcraft. The unfinished-looking stylus art that began to proliferate in the mid-00s actually looks weirder. E.g., I think the stuff below looks just fine if that's what the author wants. Think of it as a quick sketch that enhances your comprehension of what is going on. It can also be used for other assets like buttons. Go slap some filters on it or whatever. Crop it if it looks odd like the knee of the skeleton and the curved thing next to it, and maybe regenerate his collar bones.
Even when you can tell it's AI generated, what's the big deal? It's AI generated but author-controlled, so this is what the author wanted to communicate but perhaps couldn't do super perfectly - but then graphics are rarely perfect, and you don't complain that a 3D head looks blocky and uncanny. "Oh my god did you know that eyes don't look like squares and people don't turn their heads like this?!"
The situation with books is more or less ideal. A single person should be able to make a game and it should look passable. The fewer people are involved in any capacity, the better. Distribution is already enough of a bottleneck to stifle creativity.
Incidentally, artists associated with games are usually very woke and try to use their assets to promote their insidious agendas (e.g., deliberately adding racially ambiguous features, dreadlocks, mannish features to women, etc.) It's best if their influence as well as the influence of big companies responsible for fancy graphics is reduced to a minimum.