The primary concerns with digital AI art isn't hobbyists, it's copyright infringement. AI Art replaces an industry "art creation" with AI that does it for cheaper, and abuses publicly available artwork in order to do so. They're stealing other people's hardwork in order to also take their jobs from them. I didn't feel the need to refute this point, because no one will care nearly as much about copyright if their livelihoods aren't being threatened.

As for "completely changing the wording of “a large part of hobbies is acknowledgment of talent” to “only doing a hobby to be special is bad”.", your entire argument is founded on humans only doing hobbies only to have their talents acknowledged.

But if you want an direct example of it all, just look at like, Youtube, or anything else. You'll never stack up to the top channels, so why bother? Because they want to create content for other people to consume, and they do want to be acknowledged, even if it isn't as being the best. Hobbyists competing against AI in a field as subjective as art probably won't feel any real pressure from AI, unless that AI is being pumped by big time corporations or something.

The threat of AI isn't AI itself, it's the people who own it. I'm not really sure where we're even standing against each other at this point, but I'm pretty sure my position is "AI is a tool in the hands of people who would abuse it" and my goals are "prevent this abuse" and "ensure everyone can benefit from AI".

I feel that that is less so a product of AI, and more so a product of the internet in general. Comparison is the thief of joy, and all that.

However, that's just a fact of life. The best is a superlative thing. The only thing you can do is to be better than the you that existed previously. This isn't an issue that can be solved by anything, or even ruined by AI. It's an issue that stems entirely from trying to compete with others on how good what you make is. If you're only doing a hobby to be acknowledged by your peers, then your hobby is ultimately something that can be replaced by anything, since you're only doing it to 'be special'.

There's only one gold medalist in every race, and only one tallest mountain in the world. This is a fact of life that people eventually have to deal with. However, the difference is that with a future where human survival is guaranteed, not by any due paid to a corporate overlord, we will be able to live with this fact, rather than let it crush us. How many people give up on their dreams because they just don't have the time, or wouldn't make enough money doing what they actually want to do? How many would be spared from that despair?

Sure. I already accepted a long time ago that, in the grand scheme of things, I'll never be some genius inventor that turns Mars into a Gaia world or builds cities at the bottom of the ocean. I can't write or draw or sing well enough to win any awards for it.

But I sing in my car, and I write my little stories. Not because I need to. Not because I think I can do it better. Not because someone will acknowledge me for them.

I'm just doing it for fun. And in the end, that's all anything anyone wants to do.

There's a significant difference between 'doing something right' and 'doing something for enjoyment'.
If we need something done 'right', we can just have an AI shit that out.
However, you seem to miss the point that we are intentionally doing pointless things, not because it can be 'done better' or 'done well' by us, but because we, ourselves, want to do them.
For Art, money is not the motivation, it's the limiting factor.
Why do people go to the gym when they have cars? Because they want to feel strong and get fit.
Why do people make food when they could get it from a restaurant?
Because they want to either customize what they eat or feel the satisfaction of having made food.
Even if AI can give us 'better' everything than we, ourselves, can produce, they'll never be able to give us a better feeling of satisfaction from accomplishing something with our own two hands.