I think most people are ok with frame gen because it doesn’t touch the actual content. It just moves things around a bit with motion vectors which actually was kind of a thing even before AI although not very good. It didn’t repaint the game into some different art style.

Naw most people are not ok with fake frames, and like raytracing is getting less and less likely to be left on. Most people however hate fake frames not due to the frames themselves but the motion blur effect that seems to be needed to make things look ok on top of the frame gen (no one likes motion blur).

You are right that this is going to replace game graphics to some degree since its another shortcut game studios can use to cut costs (and the industry is kinda struggling at the moment). Why spend effort, time and money making a model look good when you can use a tool to gloss over the work and while it does not look “good” per say it will look better then it should.