In my opinion, I feel like AI art deters a lot of people from playing a game. Even if the game is really good, if the first thing a person sees about a game is an AI cover, the person would probably not play it. That being said, I feel like you can use AI effectively in making a cover. Maybe use AI for parts of a cover instead of the whole thing.
As for AI generated art in-game, that's basically the same as using an asset pack, only difference is that you don't have to give credit.