I don't understand the concept of an "illegal AI-generated graphic content".

For instance: as far as I know, people have been charged with obscenity charges for hosting the video of one serial killer who mutilated the corpse of a victim (not the actual murder).

However, no one is charged for hosting fictitious images of murders, torture or mutilations, regardless of how shocking or grotesque the fake images may be, even to the point of making people physically sick,because they are make-believe: there is no victim being killed or maimed.