As mentioned in another comment, LLMs (and most popular machine learning algorithms) can be viewed, correctly, as compression algorithms which leverage lossy encoding + interpolation to force a kind of generalization.
Your argument is that a video wouldn't count as pirated if the compression used for the pirated copy was lossy (or at least sufficiently lossy). The closest real world example would be the cases where someone records a the filming of a movie on their phone then uploads it. Such a copy is lossy enough that you can't produce anything really like the original, but my most definitions is still considered copyright.
