I'm strongly against CSAM but I will say this analogy doesn't quite hold (though the values behind it does)
Libel must be as assertion that is not true. Photoshopping or AIing someone isn't an assertion of something untrue. It's more the equivalent of saying "What if this is true?" which is perfectly legal
“ 298 (1) A defamatory libel is matter published, without lawful justification or excuse, that is likely to injure the reputation of any person by exposing him to hatred, contempt or ridicule, or that is designed to insult the person of or concerning whom it is published.
It doesn't have to be an assertion, or even a written statement.