"Isn't it more artificial as in 'not naturally occurring'? Like artificial snow, artificial diamonds, etc.? Artificial snow is snow, it's just not naturally occurring."
Artificially created snow*. Artificially created diamonds.
Artificial grass is not grass. 'Artificial 'Diamond is diamond, eg an isotope of carbon so it can't be artificial, but it can be artificially created.
So intelligence can't be artificial, it is intelligent or it isn't. Artificial grass is not grass.
So the term artificial intelligence can only be applied to something that mimics intelligence, but isn't.
(Actually this is more complex. Snow we only have one word for, really. So it depends what you mean by snow. If you mean the frozen ice crystals then 'artificial' snow is snow. If you mean the entire process of how it is formed, then artificial snow works.)