The AI label needs to be present if the finished product contains AI generated assets. So AI generated code, or AI generated art.

In the example above you grey boxed in AI but then replaced all the assets with ones that humans made. There is no distinction there between doing that and just having literal grey boxes.

You couldn’t require an AI label in that scenario because it would be utterly unenforceable. How would a developer prove if they did or did not use AI for temporary art?

So yes you can draw a line. Does the finished product contain AI generated assets. You don’t like that definition because you’re being pedantic but your pedantry interpretation isn’t enforceable, so it’s useless.