For the gallery, I'd say yes, since the PJ rules allow such use of reference images, just make sure it's clear:

- that you used a reference image (the rules require this) and link to it,

- how you used it (reduction, tracing, or eyeballing - not required by the rules, but a courtesy, so you don't end up in the awkward situation of people asking you about the parts you had little control over),

- that the reference image is made by AI, and which AI it was.

If you're feeling extra informative, provide the final prompt you used.

 For challenges, I guess the same applies, though with the added caveat that having the AI do your thinking for you goes against the spirit of the challenges. So, I think if you use AI to polish up your own idea and composition, that's fine, but if you use AI to interpret the challenge and come up with an idea for you, then that's not really you doing the challenge, is it? Providing the prompt would be especially helpful in that scenario.

Edit: Why is this post in the WIPs section?