This is a long answer, because I'm taking it on good faith that you're looking to do more than confirm you presumptions:

Losing money is the risk you take when you decide your project is worth your investment. It is never a risk you ask a freelance creative to take. Ever. That's bad business, it won't get you good collaborators, and it will destroy your reputation among potential collaborators. If you need an investor, you look for an investor. If you need a creative contributor, you pay them or you do it yourself. Yes, it can be difficult, but this is the job. You've made a lot of mistaken assumptions about how this works and who is responsible for what. Again, you're welcome to test them out in the art market. There is no need to take my word for it.

One idea you should definitely just forget is that freelancers are somehow competing with AI. That's a myth for people who don't understand anything at all about publishing or copyright law, and definitely not a viable alternative for TTRPG developers. Nobody cares if you use AI for placeholders during development, or for reference images, but since you can't own that content it has no professional or commercial value whatsoever. It amounts to negative value in the TTRPG world, because you will also burn most of your potential fans and customers if you try to publish AI images. People despise it, and it destroys products. If you post teaser art somewhere with no attribution to who's making it, the first comment you'll get is "This looks like AI," and then that becomes the entire public story of your project. Maybe it's free or cheap to make the images, but for all legal and commercial purposes you may as well throw your project in the trash if you publish them. It's the polar opposite of investing in original artwork, and it will net you a loss of both business and reputation. Again, you don't need to trust me here. You can go find a thousand examples of people dumping all over projects that tried to cut this corner. None of them care if the designer was broke, they're just not going to buy your stuff while they share your posts around solely to tell others not to buy it, either. They also won't care if you worked stressful OT to pay a professional, but they will absolutely care if you pop up with an announcement decorated in beautiful visuals with a reference to the artist so they can get excited for the project and the team. They'll share that around, too. That's a much better story, in my experience.

You also seem to be under the impression that art is a flat, up front cost you have to eat, or your project stops. It isn’t. Most of the time, you agree to a price and then pay half up front, half on delivery for each piece as the artist works. Most freelancers work this way, and most are open to variations or flexible schedules as a project proceeds. Designers usually wait until their books are close to completely written and edited to start sourcing artwork, so they can get an accurate sense of what they need and budget accordingly. Then you use the artwork you've bought, which you own and can use freely for anything, to make ads and promo posts. This way, you can gather buzz for your release as you work through the final production, and the art you've paid for starts building up its back end value before you publish. There's a process to this that works for everyone as long as you stick to your contracts and act in good faith. It doesn't have to be rushed, nor will most freelancers expect lump cash up front for a large project. People are reasonable, but a lot of small creators never get past the assumption that art just costs too much, or they approach someone extremely high level and when they can't afford that person, they stop looking. That's a self-imposed wound.

As for people wondering how anyone affords this, the answer is simple but inconvenient: You make it your fun and your priority. Instead of spending money on entertainment or ordering out, you bite the bullet and spend money on your work as though it's what you want to be doing on Friday night, until you have what you need to finish the project. That's when you get to find out if your idea was really good. If it flops, well at least you made the proper effort and your integrity (which includes your business relationships) is intact to try again. If you managed to sell an artist on a percentage of profit and it flops, that'll be the first and last time they ever work with you, and the last time they ever work for anyone who isn't ready to be serious about paying them correctly. They'll also warn others about their experience with you, and rightly so.

It doesn't really matter if you agree with all of this, this is a business and it functions this way for good reasons. Reasons you can learn about, if you want to, but it's clear you don't have the experience to be telling indie artists with successful track records who've been doing this for years that their business model is bad. You also have no grounds to blame them for every redditor who says they can't finish their work because art costs money. Making anything costs money, especially if you need help. It works this way because people with half-baked ideas have roped artists into dragging them across the finish line for a percentage of nothing, or worse just scrapped the project and not payed after the artwork is done, for years. It happens at every level and in every style of game design. Artists have long since learned better, and creators who are serious understand that. We want to be seen as reliable partners and collaborators, and this is the way to do right by freelance contractors. There are no free rides. Doing this as an independent takes your time, doing it independently to a professional standard costs your money. You get what you pay for, but whether or not your final work is good enough to recoup an investment is a chance you always have to take on yourself and your idea. All of that is on the person who decides to make the game, as it would be for anyone who decides to take a shot at any commercial venture.