Personal opinion here. I think it is acceptable if there are no 'deformities' in the image. Specially when talking about a 'chi chi paw paw' game ;-) Weird fingers and 'fish eyes' might turn off many players, or attract those who has really weird kinks.
But talking seriously. I personally consider it acceptable, specially if the rest of the game can hold the experience. Like any well done game.
I think using the 'Pure AI images' or Text2Img is not enough to create a good looking image or to create a specific kind of image (that you might have in your head) also might create images with lots of artifacts, specially if you use a old model like SD 1.5.
AI based on sketches. something like Img2img or using SD+controlnet or Krita AI diffusion might be a good way to start generating images or first versions of sprites, backgrounds, etc. That you can modify after with 'AI post-processing'
I use to create my own images (backgrounds and sprites) to play with bots in SillyTavern and i use a mixture of 2 of your mentioned techniques. I create several images of a character via promp and do a cherry picking, if nothing i like appear, then sketch based. And then i modify over and over using Krita AI diffusion, drawing over it and generate several options with different levels of 'roughness'. Fix weird fingers, faces, change facial expressions, etc. Also, using tools like Pinokio i manage to install an AI that perfectly erase backgrounds from the sprites to get the pngs and also have a face editor where i can change facial expressions using several sliders.
Sorry for the wall of text. Lol