"I don’t see it as theft anymore than an author reading a book, being inspired by it, and writing their own..."
Great, so then the result is neither your work, nor something that anyone should be paying for when you produce a game using AI. The AI was the one inspired to make it and did so with existing materials, you just ordered it to.
"I suspect it’s because you hold an incorrect..."
If it's factually incorrect, then you can't suspect such a thing because there's no room for doubt. It's no more correct or incorrect than your subjective assertion which is how we can have a disagreement. Just asserting your correctness is not a factual validation of your stance, which is one driven by bias as you personally benefit from the use of AI. Not saying you're not allowed to use that language but it is rhetorically deceptive and that's not lost on me.
"However, that is not viable for a lone developer with no budget..."
Countless now successful independent developpers started out this way. I personally think we should have a financial incentive system to reward their effort and help them start up like some pilot programs in Ireland seek to do, rather than defer to private capital and technology that is ruinous to our ecology and economy for a tool to ease access and lower the threshhold of skill. The blissful ignorance of externalities in your used of AI in an apparent 'vacuum' is galling, frankly. Cursing Meta and acknowledging their horrible practices begs the acknowledgement that ALL AI training as we have seens so far has similar impacts, and if not I think you should send me some information about this miraculous tool you're using that shows how it is markedly different. I'll believe in such a thing if you can.
"which highlights the moral quandary you are conveniently overlooking..."
No, because even if that were your argument, and to be clear it wasn't; Using AI is a choice and being gay is not. There's nothing at all convenient about the terrible analogy you invoked, and I don't know why you're trying to rescue it lol.