Given that this would be the first ever law with any degree of ambiguity ever created, we should create some type of like... room... maybe call it a "court"... where people could "judge" whether a person fell on the allowable or disallowable end of the spectrum

It's a groundbreaking idea but it might work. And who knows, maybe it's an innovation we could apply to other areas of law in case they also ever need to interact with any ambiguity (which hasn't happened yet, of course).

no, the photos you take with the lenses on your phone are not AI generated. They are generated from the sensors on your phone.

Have you seen some of these listings? We are talking about retaining walls invented where they can’t exist, work displayed that hasn’t occurred, etc. if you show up to a property and it’s materially different than the picture that got you there, that should be illegal.

If you want to make an argument that “everything is AI now” go for it. But I’m happy to see existing false advertising laws evolve as technology evolves

If you take a photo of your apartment does your iPhone automatically make it twice the size, add modern renovations, paint the walls and add all new furnishings?

Yep. Most phones are doing computational photography mining images creating things that never where quite there.

Does your iPhone edit the image such that it’s substantially deceptive regarding the quality of the apartment to a reasonable person?

How often would you say you prompt your camera to líe about you in a bid to rent yourself

Yes clearly that is what is meant here.