Disqualification seems appropriate. If it is against the rules to use AI photos in a normal photo category and the winner gets disqualified for that, which has happened, and it is against the rules to use a non-AI photo in this category, then the person should similarly be disqualified.
Not sure if the person behind this actually made the point they thought they were? Because it just shows that being consistent in rules and disqualification is good and the contest was consistent.