I'd agree that just taking the raw output from an AI and putting it out without any changes probably isn't going to go well. But I don't think there's any harm in a human using it as a tool - much like you using "fuzzy select" in Photoshop doesn't have any effect on someone's judgement/appreciation of your end result. Because ultimately, to the audience, the result is the important thing, not the process. 99% of people aren't going to care how it was done, just that they like how it looks.

I also see no point in "re"storing art to a higher quality or resolution than it originally was. That seems like wasted effort which could have been directed toward a sequel.

I don't see it this way, personally. I've definitely seen films where dated special effects or other technical aspects can break my immersion. I'm not someone who'll refuse to watch old films, but it doesn't necessarily mean I don't appreciate things being updated to meet more modern technical standards (ideally the old versions will be preserved, though) if the original artistic vision can be upheld (or even executed on even better than at the time).

As for directing that effort towards a sequel, I think there are plenty of reasons why they might not want to. Maybe they don't have any further stories they want to tell with the characters or setting. Maybe the actors don't want to be involved. Maybe they have an idea but can't get a good script going. Maybe they can't get financing. A couple of people going through upscaling/restoring the film is very different from creating a new film!