>Would you agree that fictional stories about how blacks want to and commit rape and murder are fine?
"Fine" in what sense?
>Is it OK to 'grok' out simulated undressings of small children because the image technically no longer depict them and instead are fantasy?
Why would it not be OK? There is nobody being harmed.
Pick some sense you're comfortable with.
If I sneak a nude photo of you and use some "AI" to add a funny hat and then spread it, would you be OK with that?