Gaming

...when I use AI generation, I have an idea or specific image in my head and I do my best to come up with a prompt that will produce what I want, or more usually, I use photoshop...

Therein lies the difference. You have an intended target and use tools to create it. The artistry is in the skill and effort put into communicating your internal concept. To my knowledge, people generally aren't saying AI is useless in a creative process, just that typing in a few words and hitting 'generate' until you get something cool, or just running a filter over an image to make it look like a drawing, isn't artistry.

...there are AI models for specific tasks, say generating human faces, that co trolled experiments have found that people can't distinguish between the AI content and the real thing.

I failed to communicate my idea clearly enough. I'm not talking about the artefacts that sometimes make images look weird. I'm talking about the deep brain sense that one can develop that can tell the difference between someone acting vs emoting, singing vs lip synching, etc. An ingenuous performance has a different character to it that can be said to fall into the uncanny valley.

There is also plenty of traditional art that hits the uncanny valley or simply doesn't look right, but that doesn't make it any less art, does it?

That depends. If hitting the valley is intentional and done using skill, that's just normal art. If it has intent but not skill, it's incomplete art. It's failing to communicate as intended, much like I failed with words above. It's part of becoming good at something to screw it up, though, so it's to be expected sometimes. If it has skill but no intent, that's craftsmanship rather than artistry. Craftsmanship is great but has a subtle difference in how it is experienced.

there's still a barrier between the type of art miyazaki is fluent in and AI art.

That's not so good as an analogy. AI imagery isn't art by itself. Even in your example of your own work, it's materials, at best. Saying AI image generation is artistry is like saying hiring someone else to paint a picture makes you an artist. Even 'prompt engineering' at its finest makes one an artist as much as project management makes one a programmer. So, the general argument comes from the pretense rather than the tool. Bringing your sentence closer to the mark would be something like 'There is a barrier between art, which Miyazaki is experienced in, and this particular type of tool one can use.' It's an apples to oranges comparison, like comparing the field of astronomy to a camera.

Should we take him as an expert on art and view digital art as less than traditional art? Or should we just roll our eyes at the stubborn old man stuck in his ways?

That's an obvious false binary. People are perfectly capable of being right about one thing and wrong about another. You give his words weight because of his expertise. That doesn't mean you have to take them as gospel, but ignoring all of an expert's opinions because you dislike some of them, or some implications of them, is a terrible idea as well.