What could happen a generation of children growing up only consuming AI generated and/or manipulative media?

It's true that manipulation of information has been the practice of the powerful for a long time, but I don't think it's accurate to say that the degree or scale to which it's been possible to do has remained the same. As an analogy, consider that both knives and nuclear bombs have the ability to kill people while having quite different implications, particularly with regard to the health and flourishing of our species.

Obviously AI isn't all bad. It's not even "bad". It just is. But the blast radius of a Bad Decision by a Bad Actor is much wider if armed with these new tools.

This.

Media has always had an agenda, which even if meant in good faith is manipulativ.

Just speaking about newspapers:

• the topics are mostly chosen for the audience who can afford newspapers (= good/settled middle class)
• the journalists usually have a social background which allows for having unpaid internships and can afford to study journalism at university (e.g. rules out working class people)
• advertisement is a big (paid newspapers) or the only income source ('free online news')
  • this implies to not fuck around with the companies/people paying the advertisement
  • this implies also, to not fuck around with the world view of what your readers seem acceptable too much (less readers = less money for advertisement)
• newspapers are owned by reach people which also impacts what topics are covered or not
• newspapers have competition in search engines/internet etc. which they will fight / badmouth
• in Germany at least newspapers/their companies tried to fight adblockers and the peoples freedom to use adblockers in court - w/o making much noise about it
• every topic I have a little bit of knowledge about which is covered by so called specialists in newspapers is full of shit/wrong assumptions/lacks any kind of deeper understanding

Long story short: Everyone/everywhere has grown up consuming deeply manipulative content from media. Given the bullshit and propaganda we are getting each day by people with an agenda/on someones payroll, crazy hallucinations / generated content won't make things worse than they are already.