The true measure is will a very young child notice and/or care. My guess is they won't and they'll like the story. Only the adults reading it will notice something off/weird/"uncanny" about it.
But of course, it's the adults buying/distributing these books so you still need to "sell" it to them first.
Kids happily get sucked into Minecraft video narrative "series" with totally insane plots that make no sense and are basically gibberish even line-to-line, and into dirt-cheap Asian and Eastern European CG cartoon imports on Netflix that are barely better. I'm 100% sure a mostly-AI creative process could produce something higher quality than those... um, genres, I guess, today.
(seriously, there's some so-cheap-I'm-not-sure-why-they-bothered kids' cartoons on Netflix, if you look for them—you're on the right track if it looks like it was rendered with mid-grade 2005 desktop 3D rendering tech using stock models and stock scenes with way-too-little decoration or clutter, despite in-fact dating no earlier than 2015. A lot of them have whole scenes that are basically just the characters talking in circles. The plots are always extremely straightforward and about 1/5 as much plot as they should need to fill the time, even by very generous reckoning. Lots of interpersonal conflict that amounts to nothing, existing just so they can have two characters have some conflict in a scene to absolutely no thematic-, message-, characterization-, or plot-related end. Most turn out to have been originally produced in India or Romania or something, if you start digging. It's crazy. But young kids will watch these.)
Oh, I'm not claiming that content's good for them, I'm reinforcing the notion that it won't be kids who reject crappy AI stories on account of their being crappy. Adults might—and should, if the stories are indeed crappy. Kids will binge content that's truly already on par with or worse than what current AI can accomplish, if you let them.
But of course, it's the adults buying/distributing these books so you still need to "sell" it to them first.