I'm not sure this argument really addresses the point. If some human artist did become so phenomenally efficient at creating art that they could match the output of the likes of Midjourney as it is today, I don't think anybody would be complaining that they learned their craft by looking at other artists' work. If they wouldn't, it's clearly not the scale of the output alone that's the issue here.

It's also not reasonable to describe the art market as an infinitely and inherently self-regulating one just because artists die. Technology has severely disrupted it before. The demand for calligraphers certainly took quite a hit when the printing press was invented. The camera presumably displaced a substantial amount of the portrait market. Modern digital art tools like Photoshop facilitate an enormously increased output from a given number of artists.