Consider also that the goal of AI generation isn't to create great art, or even good art -- just marketable art. And because it's so each and cheap to produce (once the tools are functional, at least) there's no need to try and get 1 book to sell 1,000 copies, for example, when it's much easier to sell 1,000 books once.

The only real threshold is that it has to look good enough to make that one sale.

Things are definitely gonna be tough in terms of discoverability for new authors (especially indies) for a while, but... that's already the case. There's demand for good art, though, is always going to exist, and is always going to be best produced by human hands.