I am agree. When i said the bubble will burst i don't mean like AI will disappear. But it will be something more like the early internet. (dot-com bubble) Or like with videogames in the 80's (videogame crisis of 1983). And like you said, AI will integrate in society. The same way internet, videogames, music, TV, etc, did.
And yes, AI will never replace human mind and decision making. It's a tool. Perhaps it will increase the bar of quality standards but not more.
(What i mean is, for example, now indie devs can use pre-made game engines like S2, Unreal or Wicked to create realistic graphics without the need of a huge investment).
'The real question for now would be safety of the customers, transparency of the AI products, user privacy and cultural/social impact.'
I think that depends from us, both as game devs and human beings. Since years we could barely trust in internet for reliable info (Unless you know where to search.) And sadly, with AI i think the phenomenon will not stop but increase.Perhaps that's good? the more people trust less in internet, the more people will spend their time out there, or become harder to scam, or prone to double check info? That could be a problem for social networks but video streaming services, or games stores may be the less affected. IDK.
And about AI use. I think the best is try to use local AI instead of online. Using things like GPT4ALL, Koboldcpp or LMStudio for local LLM models (i mean ChatGPT like models) , or using things like SD 1.5 / SDXL (image generator models). More privacy, no ToS.
I think the only thing we can do is to adapt to the new world and help our friends/family/loved ones to adapt as well.