Obviously a horrible hideous theft machine.
One thing I would say, it's interesting to consider what would make this not so obviously bad.
Like, we could ask AI to assess the physical attributes of the characters it generated. Then ask it to permute some of those attributes. Generate some random tweaks: ok but brawy, short, and a different descent. Do similarly on some clothing colors. Change the game. Hit the "random character" button on the physical attributes a couple times.
There was an equally shatteringly-awful less-IP-theft (and as someone who thinks IP is itself incredibly ripping off humanity & should be vastly scoped down, it's important to me to not rest my arguments on IP violations).... An equally shattering recent incident for me. Having trouble finding it, don't remember the right keywords, but an article about how AI has a "default guy" type that it uses everywhere, a super generic personage, that it would use repeatedly. It was so distasteful.
The nature of 'AI as compression', as giving you the most median answer is horrific. Maybe maybe maybe we can escape some of this trap by iterating to different permutations, by injecting deliberate exploration of the state spaces. But I still fear AI, worry horribly when anyone relies on it for decision making, as it is anti-intelligent, uncreative in extreme, requiring human ingenuity to budge off its rock of oppressive hypernormality that it regurgitates.