I can't help but feel that at least a significant part of his reaction is due to the subject matter of AI zombies crawling in what we imagine would be painful poses without feeling pain, rather than just the technology itself.
Unfortunately I'm sure this sensationalised fake-quote will spread much more quickly than any context / checking.
Hayao Miyazaki is just calling them out in a diplomatic way.
The "insult to life" is specifically about the tech, from my reading. Granted, if he had been shown something less grotesque, maybe he would've responded differently? I doubt it, the guy doesn't like CGI either.