Sure, the blockchain doesn't care, but in a maximally free situation, the NFT people would 'win' in the sense that it may only be worth paying high transaction fees (due to high demand for these JPEGs) to send around either expensive NFTs or large Bitcoin transactions. It may not be worth it / profitable anymore to use Bitcoin as an everyday currency.
Don't underestimate the NFT market; while we think it is ludicrous and stupid, there is a lot of money in it. Money that may make the Bitcoin blockchain unusable in favor of becoming a platform for JPEGs.
So I do understand both sides, but lean towards the 'keep it payment-related' side. We already have payment networks on Bitcoin that are easier and more scalable to extend (e.g. for adding JPEGs). Besides reducing blockchain usage by their very existence, instead of increasing blockchain usage (which is precisely 'NFTs on the Bitcoin blockchain' are doing).
We should encourage reducing blockchain usage if possible, so this stuff here seems like a massive step-back.
I also lean towards the "keep it payment-related" side, but the way I see it, if NFTs become commonly used on the Bitcoin blockchain -- and I mean long-term, not just as a fad -- that, to me, is a completely valid use case, even if I personally don't see much in it.
Maybe it's my rose colored glasses, but I still believe that colored coins / NFTs will eventually find meaningful use cases -- arguably colored coins already have, in the form of stablecoins and even ICOs, if they weren't so scam-ridden. And while NFTs are in my opinion currently little more than a philosophical exercise, exploring the ownership of intangibles, I do think they might become the building blocks of something bigger once the hype around digital collectibles has subsided. That doesn't mean that the Bitcoin blockchain is the right place for this, but if a few rich kids are willing to pay premium for the clout of owning an NFT on the OG Blockchain, so be it. Might be annoying in the short term, but like I said, I have doubts that it will stick. In the end there's only money in NFTs as long as someone else is willing to pay for it.