i think i agree with pretty much everyone here that poorly and/or quickly made art or simple screenshots are MUCH more preferable than AI art by a mile. the truth is- when most people are looking for a mod, they'll want to actually SEE what the mod does, not just... "here is a vague recreation of what my mod does made by a robot".
you don't NEED to pay an artist. you don't NEED to pay an image editor. literally you can just open up paint, write out your mod's title initials in big letters, and then screenshot that and use that. if something is meant to be placeholder... have it BE a placeholder instead of just using it as an excuse for permanently having a subpar AI image.
i don't agree with going after people just for using it (unless it's particularly horrendous and clearly made without any care whatsoever), but you can't expect everyone to see all the AI shit around and not react adversely. me personally i almost always avoid an AI generated thumbnail if there's a non-AI alternative. if you are someone who is genuinely interested in your mods picking up traction, just take a screenshot. it's really that easy. or use royalty free icons over a generic background. or just draw something silly. any of these things are preferable