I have been waiting to see how things play out before commenting on this mess.
I think that post and subsequential copycats of it are a serious over-extension and it should be left down to communities and how they want to operate. I am not a fan of letting AI do your work for you, whether text or art, but if the community and its members are okay with it, I don't believe it's anyone's role to dictate otherwise.
When people were saying stuff along the lines of not voting for such posts, that's understandable as each person has their preferences. We're already seeing people abuse that concept and innocent users are already getting hit. I do believe that HW as a whole are outliving their usefulness as it seems many of the things they do can now be done through the communities themselves. Whenever I come across a post, I don't go to HW for the reasons you mentioned as their appeal process really comes off as sadistic public shaming.