In theory, it would be possible to benefit from the ability of Stable Diffusion to increase perceived image quality without even using a new compression format. We could just enhance existing JPG images in the browser.
There already are client side algorithms that increase the quality of JPGs a lot. For some reason, they are not used in browsers yet.
A Stable Diffusion based enhancement would probably be much nicer in most cases.
There might be an interesting race to do client side image enhancements coming to the browsers over the next years.
The first human who discovered that they could draw something on a wall probably also got bored after a while.
And thought "I assume this will have the most usage as a once in a while tool to decorate my cave with funny animals".
But then drawing animals turned into writing. Turned into printing. Turned into emails and the web and the web 2.0 and now here we are, sending our thoughts across the world with the speed of light. Using software that we wrote to tell computers how to do this for us.
It might be similar with AI driven image generation. That it evolves in ways that are currently hard to foresee. Maybe one day, our thoughts are translated in realtime into images and send across the galaxy with the speed of light. Or faster?
There already are client side algorithms that increase the quality of JPGs a lot. For some reason, they are not used in browsers yet.
A Stable Diffusion based enhancement would probably be much nicer in most cases.
There might be an interesting race to do client side image enhancements coming to the browsers over the next years.