"chilling effects" usually refers to when people decide not to share things because of potential legal consequences. For example, if people stop creating or distributing AI art because they don't want to be sued by artists for using their style, that's a chilling effect. Basically the opposite of what you are describing

>Just say 'fuck it' until there's nothing left to scrape other than content also made by AI?

Sounds good to me! There will always be people making free art, and AI will make this much easier.

The thing that I think people are missing is that AI-generated content CAN be used to improve AI models. There is no requirement that the input data is created without AI.

Furthermore, AI-generated content on the internet is not random; it is curated content. Generally speaking people don't post every image they generate with Stable Diffusion, they only post the best images. If you consider engagement metrics and user feedback (upvotes etc), they can be a valuable and useful part of a training set.

The fact that you think that sounds good and is not a bleak and dystopian hellscape tells me that your ideal future is likely my nightmare scenario.

I fear our views on this issue are wholly incompatible.