AI upscaling built in to video players isn't a problem, as long as you can view the source data by disabling AI upscaling. The human is in control.
AI upscaling and detail hallucination built in to video codecs is a problem.
AI compression doesn't have to be the level of compression that exists in image generation prompts, though. A SORA prompt might be 500 bits (~1 bit per character natural English), while a decompressed 4K frame that you're trying to bring to 16K level of simulated detail starts out at 199 million bits. It can be a much finer level of compression.