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I just read through the submission rules.
There's the standard rules of you have to have your illustration in the correct image size to fit on a card, etc. Rules for no racism badthink etc. No cheating for more submissions than allowed. And then rules for not copying someone elses image and submitting it. As far as the actual method of creating the image, it is not specified or constrained. All you have to do is submit an original illustration that has not existed before. There is nothing here that suggests using stable diffusion for your submission is against the rules. And neither should it be. Westerners will seethe and dilate because Japan actually likes generative AI and hasn't been going on a banning spree like all western nations against it.
And in the end, if you say AI is slop then surely that will reflect in it being a lower quality aesthetic image and would naturally get fewer votes to not win. If it's winning, then that disproves your assertion because it shows that people just like the end result of what it produces more than what some furfag "artist" shits out.