Police investigation remains open. The photo of one of the minors included a fly; that is the logo of Clothoff, the application that is presumably being used to create the images, which promotes its services with the slogan: “Undress anybody with our free service!”
I know it’s impossible to perfectly predict future technology, but I believe AI will exist alongside traditional filmmaking. You’ll NEVER get something with the emotional impact of Up or Schindler’s List from an AI. You’ll be able to make fun action or fantasy movies though, and like you said, fully customized for the viewer. I imagine it’ll be like CGI vs traditional animation now - you only see the latter for passion projects, but for most uses, CGI works well enough.