I don't think there's a point in law that makes ML models more of a violation than thumbnails are. For one thing, they're a lot more transformative, so thumbnails actually seem worse here.
That's US law, of course. EU law (which Stable Diffusion 1.x was created under) simply explicitly says ML model training is legal for research purposes, so the question is more about providing it as a service.
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I don't think there's a point in law that makes ML models more of a violation than thumbnails are. For one thing, they're a lot more transformative, so thumbnails actually seem worse here.
That's US law, of course. EU law (which Stable Diffusion 1.x was created under) simply explicitly says ML model training is legal for research purposes, so the question is more about providing it as a service.