Are you reviewer 2?

Joking aside, I think you have too strict of a definition of novel. Unfortunately "novel" is a pretty vague word and is definitely not a binary one.

ALL models can produce "novel" data. I don't just mean ML (AI) models, but any mathematical model. The point of models is to make predictions about results that aren't in the training data. Doing interpolation between two datapoints does produce "novel" things. Thinking about the parent's comment, is "a blue tiger" novel? Probably? Are there any blue tigers in the training data? (there definitely is now thanks to K-Pop Demon Hunters) If not, then producing that fits the definition of novel. BUT I also agree that that result is not that novel. It is entirely unimpressive.

I'm saying this not because I disagree with what I believe you intend to say but because I think a major problem with these types of conversations is that many people are going to interpret you more literally and dismiss you because "it clearly produces novel things." It isn't just things being novel to the user, though that is also incredibly common and quite telling that people make such claims without also checking Google...

Speaking of that, I'm just going to leave this here... I'm still surprised this is a real and serious presentation... https://www.youtube.com/watch?v=E3Yo7PULlPs&t=616s