You are confusing LLMs with diffusion models. LLMs generate text, not images. They can be used as inputs to diffusion models and are thus usually intertwined but are not responsible for generating the images themselves. I am not completely refuting your point in general. Generative models are capable of generalising to an extend, so it is possible that such a system would be able to generate such images without having seen them. But how anatomically correct that would be is an entirely different question and the way these companies vastly sweep through the internet makes it very possible that these images were part of the training

well companies decide to go public for a reason

well valve does the whole gambling for children shit so they aren’t exactly saints. They are just the least shitty. Also it helps that they are still private so they don’t have to answer to investors. But still, the whole skin trading, steam market stuff isn’t great