A listing in my area had AI generated image for showing the surrounding area. The AI misunderstood the scale of a field, and added kids the size of 3 story buildings playing soccer. And this was not realized before being posted.

Or just don't include the AI at all. Have some imagination.

Every apartment I ever rented and the home I bought had regular empty photos and it was just fine

I'd accept that, and laud it as a valid use case for AI images even; as long as it was clear what was being done and had a human in the loop to ensure the generated image was reasonable.

All the better if it can maybe lead at least some of the more mom & pop landlords to not charge more because they’re looking to recoup staging costs.

This is never, ever going to happen, not even once. No landlord will ever willingly lower the price of anything. They'll just keep charging the same price and pocket the difference. They don't run charities.

All the better if it can maybe lead at least some of the more mom & pop landlords to not charge more because they're looking to recoup staging costs.

The staging costs are a drop in the bucket relative to the extra $ they're bringing in just by better marketing the space. Like one month of upsell from an empty box to a staged apartment likely covers those costs - everything else is pure profit.

They're pricing things based on what the "market" will support, and that doesn't change whether they spend $200 staging or $2 AI staging. Mom and pop landlords are still wealth parasites trying to maximize profits.