Additionally, which is what you all somehow missed:
You do need TWO prophets to properly "settle your religion" - one to found the religion (and/or to found the holy city), another to build the holy city building.
When playing without divine prophets you still need one prophet to get the holy city building.
When playing with divine prophets you need two prophets to get the holy city building.
2 - 1 = 1
The main rationale for getting the free prophet when playing with divine prophet is to allow you to found a religion shortly after you invent the religion so that it is similar to playing without divine prophets.
The secondary rationale is that since great prophets can be used for one more thing per religion in the game (founding the religion), you need to get as many more great prophets as you would have founded a religion without divine prophets somehow, thus it makes sense to give one for free to the one inventing the religion to make the amount of great prophets to be used for non religion founding causes virtually the same as when playing without divine prophets.
That algorithm would be a very bad way to determine that for the AI because it tends to be designed to make the religion get founded in the worst possible location for a new religion not the best.
The algorithm is designed to found the religion in your "best" city that is not your capital, I rather like the result of it every time I play, it is good design to not put it in the best city anyhow, to make it a bit unexpected and provide vulnerability, or a drawback in the boon it is to found a religion in this game.
Quotation marks on "best" as it is subjective and it doesn't consider all factors, only some important ones.
That algorithm is what has always determined where the holy city is for human player and AI alike when playing without divine prophets, and I'm sure the AI doesn't choose all that much better when having to found it with a great prophet, it is actually so bugged that the AI will only ever found their favourite religion with a great prophet, so if there's only AI that have late game favourite religions in the game then the player will even on nightmare difficulty get all the early religion holy cities. So I would say the regular algorithm is greatly superior to the great prophet found religion algorithm.
Everywhere where the human has a choice the AI use an algorithm to make the same type of choice, so giving the human player a list of cities to choose from and the AI an algorithm to make the same type of choice is not a bad solution for giving the player a way to choose the city (we could always make the algorithm not de-evaluate its capital when divine prophets is in use). Messing around with great prophets that lack proper AI for founding religions is the poor solution to giving the player a choice.