hate crime is already a crime. If someone were to want to incite hate, they could do it today just as easily as a hypothetical future where an AI generated image is readily available.

So the problem isn't the AI, it's the forum of haters. Restricting AI usage, in the hope of not having someone use it to incite hate is too roundabout a way to achieve any significant result, while everybody pays a high cost (of not being free to use such an AI as they see fit).