There are a few comments on the unnatural/hallucinated look of the compressed images.

I don't like it, but this is sort of the expected behavior for 'AI' based compression and denoising.

Think of it as encoding followed by decoding where encoding reduces an image to a 'prompt' and decoding a generation of a new image from that prompt.

These techniques have become quite popular in astrophotography and it makes me uncomfortable.

Note though that this strategy is not that fundamentally different from the classic method. There the steps are called analysis followed by synthesis.

Analysis step detects the degree of presence of preferred basis functions (for example, discrete cosine basis), the undesirable components discarded or down-weighted. Then in the synthesis phase, the bases weighted with their detected or accentuated strengths are recombined to obtain the image.

What's different this time is the nature of the bases and the Bayesian prior they encode.