Eh I think it would have been worse if this guy won. To my knowledge he was trying to get the AI to be considered the author and then himself to be the owner of the copyright via the “work for hire” clause. As I understand it that would have been catastrophic. It would have likely meant that anything users prompt from these generators would automatically be the copyright of the people running the AI.
The process you describe could likely still be protected under this ruling since there’s human involvement in the selection of output to use and the altering of it afterward to fit whatever creative vision the person had. If this had won a person doing that it seems would at best be making a derivative work and still not be able to protect it.