Of course, it's likely that we'll get past that point, where AI generated images aren't in the uncanny valley, but until then it's off-putting.
Recently I had an email from someone praising my open source work and it was clearly AI generated, which felt completely insincere. And so, misuse of AI in situations where it makes the human being that interacts with it balk isn't good either.
As you say the language is annoying: "AI powered" or similar language is just meaningless to most people. People are not turned off by features in software that 'just work' because there's some AI running quietly behind the scenes. They're put off by bold claims that don't actually materialise and the human/AI interaction-boundary that can sometimes lead to more effort on the part of the human.
AI is a technique used by software engineers, we shouldn't need to talk about it at all (except to each other and maybe VCs). We don't market our apps as "Relational database powered", in time we won't mention AI at all.