We didn't automate away art. We automated away the technical skill of digital illustration, which a totally different thing. Now, instead of artists also having to be illustrators, we've opened up being an artist to a wider audience.
What makes this so much worse than things like chess AI is that chess is done for fun and the final output is useless. While art is mostly for the output. While the process is fun, it’s fun because of the value of the output.
No, we've opened up the ability for someone who writes a short textual description of an illustration to obtain an illustration ostensibly matching that description for a much lower cost than they might have paid for it before these technologies were available, e.g. by commissioning an artist.
You're right that technique can be abstractly separated from other aspects of the artistic process, but you miss how the inability to guide the application of technique will cut your capacity for expression off at the knees. The prompt is the art, such as it is, and the ability to iterate on versions of the prompt and parameters of the model to random-walk your way to a result that approximates what you were imagining is a very poor substitute for the ability to lay down the brush strokes yourself.
Yes, that is the new art form which has been invented and opened up to a wider audience. By analogy, some people used to complain that DJs were not real musicians, because they just play records made by other people. While technically true, this observation is not interesting, because selecting and mixing records to create a larger sonic flow is its own art form.