if I understand right, DLSS (outside frame generation, a relatively newer DLSS feature) isn't interpolating frames, it's upscaling frames. and its never before altered the look beyond just upscaling it.

this new shit is definitely a different direction for DLSS and it sucks and I hate it

You can write a shader that drastically alters the artwork too, and DLSS is basically a closed source ML shader running on a separate chip (come at me gamedevs 😤)

edit: tho don't get me wrong it does suck. I don't know why would I ever want a face filter in a video game

Yes, but it has to make up details to do that because it gets a lower resolution image, or for frame gen it gets two frames it needs to interpolate

There has been machine learning for decades, but you're right in that interpolating frames is quite different from the way generative AI works. Both DLSS versions rely on a form of neural network but the latest ones are diffusion models which are more controversial, for reasons I'm sure you know.