It is indeed a complicated problem with many intertwined variables, wouldn't wanna be in the shoes of policy makers (assuming that they actually are searching for an honest solution and not trying to turn this into profit lol).

For instance too much regulation on fields like this essentially would kill high quality open source AI tools and make most of them proprietary software leaving the field in the mercy of tech monopolies. This is probably what these monopolies want and they will surely try to push things this way to kill competition (talk about capitalism spurring competition and innovation!). They might even don the cloak of some of these bad actors to speed up the process. Given the possible application range of AI, this is probably even more dangerous than flooding the internet with revenge porn.

%100 freedom, no regulations will essentially lead to a mixed situation of creative and possibly ground breaking uses of the tech vs many bad actors using the tech for things like scamming, disinformation etc. how it will balance out on the long run is probably very hard to predict.

I think two things are clear, 1-both extremities are not ideal, 2- between the two extremities %100 freedom is still the better option (the former just exchanges many small bad actors for a couple giant bad actors and chokes any possible good outcomes).

Based on these starting with a solution closer to the "freedom edge" and improving it step by step based on results is probably the most sensible approach.