AI or "algorithm" upscaling fundamentally creates something out of nothing. That's what upscaling is, so it is generative because its quite literally generating "guesses" at what should be there, pixel by pixel.
Its literally the trope in movies where they're reviewing grainy security can footage and someone says "enhance" and its magically a crystal clear image. Its just that we have technology to do that now.
I'd agree there's a semantics argument that using AI for upscaling is different than creating new, but its just that semantics.
While I agree with you, its that very misunderstanding that bosses and owners have, and they'll fire regular folks and replace with ai. They may suffer lower quality and even catastrophic failures but it will take time for them to realise and rehire people. All those regular folks will be out of work during that time.