Covering the second half:

I hadn't heard of Elsagate and had to look it up. How does AI factor into that? As near as I can tell Elsagate started with some random guy making disturbing videos and mislabeling them as child-friendly.

I'm a good bit older than you so my nostalgia doesn't take me lead me to any of the title you mentioned. For the most part it's stories that aren't covered by anyone's IP. My childhood had a lot of folk tales recited from memory. Those stories were fairly common but there would be regional variation and most tellers would put their own twist on the stories (for example, when my Aunt told the story of the Seven Kids she would do a particular squeaky voice when she got to the part where the wolf swallows the chalk (in her version it was always chalk). That's actually quite close to how LLMs work. She heard various versions of that story throughout her life, then she repeats it with some other bits that she incorporated from the rest of her life. I do the same thing when I retell the story to my children. It's basically the same story my Aunt told but I translate it into English and add some modern slang.

What would stop an AI from writing Scar into the Lion King? If you told an LLM to, "Write Hamlet but have all the royal family be Lions," it's likely you'd get some evil lion version of Claudius.

There were a lot of homosexual coded villains in older media. There were also a lot of films where all the black people were bad guys, all the Asian people were goofy servants and all the women were housewives or prizes. The general consensus today is that those choices were horribly discriminatory. If AI manages to avoid that sort of behavior it would be a good thing.

The flip side is also that artists can just as easily slip hateful material into otherwise reasonable art. Human history is full of unethical choices. Even if the AI itself doesn't have ethics the people using it can be held to the same ethical standards as the users of any other tool or medium.