If I understand this correctly, the prompt just keeps coming back. The fact that you can't permanently dismiss the dialog is basically just a way to force you into agreeing eventually, simply because you get tired of constantly clicking "Not Now"

Could this be partly caused by the explosion of AI-assisted app development?

It feels like almost anyone can now build an app and get something publishable within a few days. If the number of submissions has grown significantly, it would make sense that the Play Store review queue is getting longer.

AI may have made building the app much faster, while unintentionally making the final step slower for everyone.

Personally, I think the review process should prioritize updates to apps that have already been published for a long time over completely new apps or apps that were only submitted recently. At least that would make it less painful for established apps waiting for a routine update to get through the review process.