Earlier quoted context omitted.
Okay, but still, some kinds of changes are better than others. They should probably start testing for this in the visual perception tests: is lost information greyed out in a visible way? Are words and digits always fuzzed, or replaced? Because it turns out that fuzziness and compression artifacts have a higher-level meaning: when you see them, you know something has been lost. That's an important (if inadvertent) si…
It could be a problem if it hallucinates the wrong license plate number at a crime scene. If all you want is a gigantic 8K resolution stock photo of a woman holding her baby in front of a laptop without devouring 10 MB of the user's data cap, it may be fine if the woman has a slightly different (but still highly detailed) hair style.
But if you're using photography to look at things in the world, that's a whole different story.