I agree that a flag similar to the copyright flag would be the best way to deal with wholly AI-generated content. I actually think the current wording of the copyright flag supports this as it says:
Violates copyright law or was created by someone other than the observer and lacks attribution (emphasis mine)
To my mind, a wholly AI-created image meets that second criterion - it was not created by the observer. The observer is also generally claiming a license over an image they didn’t create (which falls afoul of some AI image generation programs).
This approach might not cover a situation where an observer cites the specific AI that created the image and/or doesn’t claim a license over the content, but those are really rare occurrences, as it defeats the purpose of posting AI images for most posters I would think. The existing Copyright flag language could potentially just be modified to make it clear that it includes AI-created images.