I would strongly agree with you. I know so many people that will completely discount a game if the graphics isn't bleeding edge "photorealistic"-adjacent.

I know a bunch of friends that love base building, automation, logistics, trains, programming and so on. But they completely discounted even trying a game like Factorio because "the graphics are ugly"... Instead opting for Satisfactory or similar. Satisfactory is an awesome game too, but it lacks a lot of technical depth compared to Factorio.

There's a lot of other games where the atmosphere or art direction are also hugely important, and a grey or black/purple checkered texture just doesn't convey the same feeling as if something looks like a rusty iron pipe.

I can see many situations where either AI generated placeholder textures or just textures from an asset library could help a lot with prototyping, and play testing.

From my experience of selling and apartment almost a decade ago, it's clear that many people lack imagination. We heard that several people didn't want to buy the apartment because they didn't like the furniture... which wasn't even part of the sale, or didn't like the colour of the walls... Which they could of course just paint over... So I can definitely see that many playtesters would have trouble envisioning the game, if all the textures are solid grey, and the models are square.

I'm however also very much dislike the current state of things where developers will AI generate huge portions of the game and assets releasing it as the final product. It's a shame that the craft of artists is getting dumped and replaced by AI gen...

In my book, the developers can use AI as much as they want, but they should clearly declare where AI gen has been used. Then the consumer can make an informed decision of whether to support it or not. I would personally avoid games that ship AI assets, but wouldn't at all have a problem with the developer using AI assets during development and prototyping.