I'm admittedly skeptical. The AI generated novels I've seen have been bad. Really really bad. It's been a few months, however, so maybe the landscape has evolved faster than I expected.
Is there a source you can recommend for further reading?
Which novels? Did you compare them to novels created by handcrafted algorithms? I guarantee you, what you have read wasn't bad, it was fantastically good, compared to anything a software could have come up with without machine learning. So it seems likely that traditional procedural level generation could also be far outperformed by AI systems.
I've been able to write coherent stories a dozen pages long. You need to have it generate plot points and other auxiliary information about characters and whatnot and it does a pretty good job. Obviously it's not going to one shot all that yet.
So you are saying procedural level design could be solved with generative AI?