I hate to start by mentioning Picasso, but one of his popular quotes sums it up perfectly: "Good artists copy, great artists steal". If we understand human imagination as "thinking with images", it seems that the process of synthetic imagery generation is not far from what we humans do when imagining. I don't want to compare human vs machine intelligence, but I think it's interesting to remember that almost everything we humans do is a remix anyway.
It's fascinating that you say that AI creates monsters. Thank goodness! The internet was full of clean images, sanitised for the neoliberal eye in which everything has to be "normal". AI glitches (creating what we call "monsters") are precisely what help us to deal with the discomfort: images that are alien, strange bodies, the mix of subjects that we humans have not dared to mix. Maybe it is time of the return of the hopeful monster.
If it is true that AI erases nuances or aspects of humanity, I think this may be just the answer to your question: how can we construct more alternative narratives within AI? In the era in which we are precisely trying to move away from demotivating anthropocentrism, the loss of human nuance may be what we need. That mirror that shows us the capitalist realism in which humanity is still enveloped.
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Pierre (22.01): Hmm, I agree that the lack of individualism that AI ushers in might be productive in that it highlights the group rather than the personalized, but wouldn't using AI systems for alternatives be similar to using the master's tools to dismantle the master's house? I like what was mentioned in the first paragraph as "harking back to Web 1", i.e. doing less as a result of witnessing too much of the more.
Also, a nice reference on scrapism.