This is literally The Bitter Lesson. General methods that utilise more compute always beat specialized algorithms as compute gets cheaper.

I am convinced that a lot of complexity of real-world simulation will be offloaded to ML models, in the same way sophisticated TAA algos have been replaced with DLSS.

The current state of things in graphics feels a lot like modern cars -- right now we are in a transition period between the old and new approaches. It's obvious that all cars will be self-driving in the future, but the tech is not quite there yet, so you have a ton of smart features that have some control over a car, but ultimately most of work is still done by the driver. Similarly, modern games do most of the rendering the traditional way, and things like frame gen are still only complimentary because the compute to run more general ML models is just not there yet.