If I look at a photo of Prince and then using that image as reference create a new silkscreen painting is that fair use or infringement?
Because the US Supreme Court has ruled that instance I referenced was infringement as both images were used for magazine covers [0].
the existing copyright rulings are sufficient to determine this, and has nothing to do with ai models.
You've already pointed out a case - if you use an AI to generate an image which has sufficient likeness to an existing one, then the AI portion is irrelevant to the ruling. You could've made that same image in photoshop without AI, and should obtain the same ruling.
But in the above circumstance, the silkscreen used in the creation of the image does not itself infringe. And replace that silkscreen with AI model, nothing has changed.