they could do a step-by-step art tutorial, and wouldn't have to pay anybody, nor use tools that rely on stolen artwork. but nope.
highly ironic how they made this thing, and promptly showed it off to thousands of people on the internet, immediately invalidating your example
they also promote (just by choosing and mentioning all of these things) those services, like Replicate, that monetize the use of stolen artwork (by selling compute, directly coupled with nn models), and ultimately profit from it (solely, without "giving back to artists whose art they perused" or anything).
they could make art in a way that wouldn't participate in tech art theft racket, but they didn't. and they didn't just participate in it, but promote it and perpetuate it.
Is the solution to prohibit any type of processing of such images, or should it specifically prohibit the calculation of derivatives of the loss function based on those images, or something else entirely?
is there precedent for this? How are the services you reference operating if it were so clear?
I find the complaint about copyright so strange in this case. Copyright has a purpose, stopping some random person from creating an imagine only they will see and use is not that purpose. In this case it's just spiteful. Ultimately, if you think he's infringing your copyright you should sue him, but I don't think you'd win.