It’s really all about context. If we’re all playing Harry Potter-esque mages, we’re not worried about swords and shields, generally. If I’m playing as Aragorn or Boromir, my expectations will be very different.
I would opt for a homebrew setting on an earth-like world. The reason is that, having the world be earth-like means there won’t be any misunderstandings about the basic rules of the physical world. Using your own setting means that you won’t have to fight up hill against any assumptions people might have with regards to cultures in that world.
Just FYI but I also created an OSR group on lemm.ee. No harm in having more than one though!
I use AI images all the time for mocking up elements for my home game campaign and for generating quick thumbnails for YT videos. I think that while there are A LOT of limitations, gotchas, and quirks about using them, I have gotten very reasonable results in much shorter order than I could achieve using any other tools available to me. If you stick with it, learn tips and tricks, and invest time, you can get some really good results but they may not be precisely what you asked for. I find that being flexible in my demands helps very much.
You can play D&D and similar games solo but they usually require some help and extra tools to do so. Might I point you towards the !solorpg@lemm.ee community? They might be able to answer questions and help you get started if you want to give it a try.