Obviously, nothing is ever really completely black and white 🙂) .
While there probably is a level of "direction" involved, I personally think it is limited by the "guessing work" done by the model, namely the noisy data it tries to fill in, and the stereotypes it will inevitably fall for. Direction isn't just talk and "leaving it up for interpretation". The film is "trying" to replicate hallucinations of the human mind, but I think it is failing simply through the fact that it is not grasping the way a particular person's (the director in this case) interpretation of how dreams and scenes blend together, it is always the same overly blended effect caused by the algorithm.
I think it is superficial, it leaves the subtleties of human perception, dreaming and recall to a mere guessing game, when it is in fact something we each uniquely experience.
To add to that, a (good) director/producer does not simply say what they want in a scene. They curate a team, they source materials, they control the outcome down to the finest detail through the help of other people's expertise and creative vision too. They also make mistakes, but they are completely determined by their own activity, not random.
This is just my opinion, I guess.
One example where I did see genAI be used in a borderline interesting way is artist @i_shkipin on Twitter which trained an algorithm on their own paintings. In this case, I see how AI has been used more like a tool and less like an excuse for "I don't have the means ;-;".
A work (or maybe series) which i think does a way better job at conveying dreamlike, deathlike and hallucinationlike human experiences is Joel G's ENA series on youtube, and the new game ENA Dream BBQ on Steam (it's free btw, I really recommend it). It was lovingly crafted, INTENTIONALLY crafted. Limited resources, small team, originally no team at all. Just someone with a will and an imagination undeserving of being left thoroughly unexplored. EVERYTHING has meaning and feeling. https://www.youtube.com/watch?v=qLurAhsqXWc
Sorry for the very long answer again, I'm just very passionate about this discourse because I could never truly win it hhhhh. My stage design teacher used to parrot a famous romanian director's words to us all the time, that being "You cannot create living, meaningful worlds unless you love every splinter in the wooden planks you build with." or something of the sort. I tend to really believe that.