I'm not talking about the legal aspect of it, just found the breathless "look what the ai can do" rather silly given it's effectively just undoing what EK has done to original material. (and with a certain dose of uncanny valley thrown in) :v
What she or anyone else is doing is mainly a stop-gap though. It allows you to create, what you want on the cheap, without needing to pay real actors and actresses. I'll see what people will prefer if they can choose between games that are very similar content wise but one looks actually real and the other uses 2D or 3D arts like ORS or the Daz games we have now.
Well, fairly sure photos of the same actress would be quite homogenized appearance-wise given it's, you know, actually the same person. Backgrounds are another story obv, but they're replaced anyway.
It really isn't as easy as that, since you rarely have just one person on every single render. Maybe you could use some photo of them as the paper doll, but for every scene you would need to use the same actors and actresses for the same character or it would be weird. So you would now need someone that could be "Ian" and someone that could be "Lena" and they not only need to have enough scenes with each other but also with other people that could than be the other characters who also need to have interaction with each other...
You also need to find fitting photos or you have to write your story around the photos that you can get, reducing your freedom for the writing process. With AI you could have the same looking characters do whatever you want in whatever environment you choose without any potential legal repercussions and they would all look like real people in real environments. We'll see if almost every game will at one point go that path or if more "artsy" approaches by people that are actually able to do them will remain.