To the best of my knowledge, to date all AIs used to create "artificial intelligence art" were "trained" using the work of artist who never gave permission for their art to be used for this. An AI doesn't decide how to 'draw' lines, it 'copies' pieces of work from its library - 1:1. So, to my best understanding, every single image generated by such an AI could be considered a violation of international copyright law.
Not to read too far into the decision making processes by the Newgrounds team, but one of their reasons to not permit this might be that all of those images might become DMCA-strike-able in the foreseeable future. Which would take too much time for them to deal with.
Yatsufusa
AI art is actually against the rules on NG ( https://www.newgrounds.com/wiki/help-information/terms-of-use/art-guidelines ), so if you ever stumble upon some, you can just report that "art" (the little flag-button).
And if you see somebody uploading a whole bunch of those images, you can just write in your report that the user in question has lots of them. Saves time for both yourself as well as for the moderators. :)
Jukestar
Very happy that Tom and the others agree this shit shouldn't be here.