Good question.
This is the 1st game I'm making and it is the one I dreamt on making for many years. Coming from a software background (with a painter/animator's heart) I originally thought AI would save time and allow me to finally do it the way I wanted. I also didn't realize the amount of negative feelings AI content can create within indie dev & player communities. Setting aside the debate, as I progress with the journey I come to realize the final game would be much better without AI, for the most parts, but it made me learn and adapt oh so much more quickly.
It is my intent, in case I prove this game is commercially viable, to replace all AI assets within the game. I have already replaced many of them and in the process to replace the rest.
As to the sketches to game process.
Most of the sketches are quite old - a few years back.
Sometimes I would ask AI to redraw from different perspective/different positioning based on my sketch just so it would better fit how I integrate it in the game. When drawing sketches I wasn't always able to think in advance about how the actual gameplay limitations would affect it. I did not feel it diluted from my intention by doing just that. I could never get a result from AI that I like as-is. I always have to edit it extensively / remove unwanted details and draw in others. AI was used mainly to save time on coloring and upscaling images to "level" size - using creative commons AI models. I do all the animations, shaders and coding myself using skeleton/bone rigs authored and keyframed in Spine.