From my experience, if the picture requirement is on, the game just won't make new wrestlers unless they have pictures for them already (meaning pre-set workers). At least that's what happened in my game.
I do have a question to piggy-back on this though: when my game began generating wrestlers, I added custom pictures for the computer-generated workers using the In-Game editor. Yet those wrestlers' photos don't show up on booking screens, instead just displaying the generic blank blue head. Anyone know a way to fix that?