Earlier quoted context omitted.
I think the Warhol decision is an entirely different kettle of fish. Just take a look at the pieces in question: the Warhol portraits don't really look that different compared to the original photographs. The benefit that generative AI has is that, when claiming copyright infringement, you need to specify individual works that were infringed. It's not enough to say "this work is an amalgam of these other ten thousand…
No one has to claim individual copyright infringement for it to be copyright infringement. At any rate you can force the infringer to disclose what works they use as input. Copyright law doesn't encompass novel uses, but courts can and will deal with it.
That's a little bit like "If a tree falls in the forest but nobody hears it..."
I mean, sure, "theoretically" any number of things can be infringement. But it's obviously a gray area, so it only really matters when somebody brings a suit and a work is found to be legally infringing.