You really can tell, yeah. It's like the text equivalent of the uncanny valley.
Also, even if it wasn't, I don't think I'd want to play with it. It'd feel weird to know that some human didn't want to play the actual game with me and instead was using a robot to interact?
Kind of like if you walk up to someone IRL, and offer a handshake, and instead of shaking your hand themselves, that person instructs a robot butler to shake your hand for them.
For game lore written by AI, it's the same feeling, as if you want to walk into a beautiful palace constructed by human beings but instead you're walking through a hologram generated by a robot. Maybe it doesn't really look that different but there's a totally different vibe.
A long time ago in college I remember a discussion about AI where we were considering if robots could ever reach human levels of creativity. The consensus was that human creativity was measurable and logical and robots could achieve it, eventually. But I disagreed, because I don't think human creativity is actually measurable and logical. I think we don't know what we know. So we can't code it into a robot. There's a whole dimension of sapient consciousness that lends weight we can barely even sense, let alone measure and encode, to the things we think about.
You know that feeling you get sometimes when a vibe is "off"? Sometimes vibes don't align, and sometimes they do, and sometimes they're just unnoticeable. But a robot doesn't have conscious vibes. It's empty.
So, the human consciousness behind a piece of artwork, whether it's visual or verbal/written, is immeasurable and invaluable, and shouldn't be discounted.