The question of the ethicality of the practice depends on how you weigh the discomfort inflicted to artists (number of artists times their prejudice) compared to the increase in comfort of everyone else (those who had never considered hiring an artists and who acquire the capability to create average art -- I'd have written below average, but AuraFlow and Flux happened in the meantime -- at no cost, and those who could hire artists and are able to save on this cost, times their respective benefit). Of course, the discomfort experimented by any artist, individually, is superior the individual benefit of a person being able to generate an image of his favorite elf barbarian for his character sheet instead of letting the rectangle free. But there are few profesionnal artists compared to the masses of non-artists, and the needs of the many often outweigh the need of the few. So how you weigh those value will certainly lead each of us to a solution, potentially radically different.
I don't think there is a single answer to the ethicality of it (everyone will weigh things differently), but I also feel that calling for laws is a debate of the past. Unlike a debate on hyperspace travel regulations (is it ethical to allow travel at warp 8?) or a new immortality drug that would have been invented just yesterday, laws have already been passed to regulate data scrapping in some countries, in response to the rise of AI technologies. So saying they are not ethical is no longer a theoretical debate, of being faced with outdated laws that didn't take an evolution into account, it's quite frankly saying "are those nations doing it wrong?". It's like discussing the ethicality of, you know, camping, or letting free access to, you know, gardening implements instead of given them only to lawn enforcement officers. It is no longer solely an ethical topic, but it has become, with the advance of laws in many places, a political topic. Reading the Radiant Citadel thread, I was confronted to many people saying "look at that silly system, they provide basic welfare to any resident, paid by taxes, that's a stupid unbelievable commie utopia", despite the evidence of basic public services provided wouldn't be out of place in Western Europe. This board tries to avoid politics, so let's avoid devolving into that.
So I'd say "of course it ethical as long as we collectively consider that the benefits outweigh the cost, as demonstrated by the fact that countries actually have made this decision and allowed it into laws, sometimes with restrictions." I don't see how we could say anything else without saying "the people of country X are doing it wrong".
The existence of larger problem shouldn't prompt us to do nothing about smaller wrongs if we decided collectively there were wrongs. We got rid of smallpox, and we didn't just say "people will die anyway, why bother?"
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