You can do the entire thing as a one-liner using only find:

find ./ -type f \( -iname "*.jpg" -or -iname "*.png" \) -exec sh -c 'mv "$0" "$(uuidgen -r).${0##*.}"' {} \;  

Test on my machine:

phaedrus@sys76 ~/D/test> ls -lh  
total 0  
-rw-r--r-- 1 phaedrus users 0 Dec  6 01:08 test1.jpg  
-rw-r--r-- 1 phaedrus users 0 Dec  6 01:08 test1.png  
-rw-r--r-- 1 phaedrus users 0 Dec  6 01:08 test2.jpg  
-rw-r--r-- 1 phaedrus users 0 Dec  6 01:08 test2.png  
-rw-r--r-- 1 phaedrus users 0 Dec  6 01:08 test3.jpg  
-rw-r--r-- 1 phaedrus users 0 Dec  6 01:08 test3.png  
phaedrus@sys76 ~/D/test> find ./ -type f \( -iname "*.jpg" -or -iname "*.png" \) -exec sh -c 'mv "$0" "$(uuidgen -r).${0##*.}"' {} \;  
phaedrus@sys76 ~/D/test> ls -lh  
total 0  
-rw-r--r-- 1 phaedrus users 0 Dec  6 01:08 062d8954-9921-42bd-ad24-0e4ed403a5db.jpg  
-rw-r--r-- 1 phaedrus users 0 Dec  6 01:08 111f859f-b1fe-4488-b2bc-75585320e3a3.png  
-rw-r--r-- 1 phaedrus users 0 Dec  6 01:08 39b9fe4e-7a05-43c9-b30a-69e9a13aa3a9.png  
-rw-r--r-- 1 phaedrus users 0 Dec  6 01:08 57bda91e-49e5-43fe-8318-aeeb2e3adde7.png  
-rw-r--r-- 1 phaedrus users 0 Dec  6 01:08 97398eb7-54aa-488f-8fbe-0b84b5e5a50d.jpg  
-rw-r--r-- 1 phaedrus users 0 Dec  6 01:08 f7a13274-e2c0-4fa7-9907-c590d1280c2e.jpg  

btw, Lemmy doesn't like language specifiers in the multi-line code blocks, so it's difficult to read all that in its current form since there are no tabs to know how you have it formatted. Makes it virtually impossible to troubleshoot your specific script.

edit: further reading on the ever useful variable expansions (${0##*.} portion of my one-liner):
https://www.gnu.org/software/bash/manual/html_node/Shell-Parameter-Expansion.html

You forgot the -print0 at the end of the find command. In the read -r -d '' you want to read NUL-separated strings, so you must tell the find command to also use NUL characters between the filenames.

Edit: I think there are better answers downthread than mine, but I hope my first comment spurned them on.

Not the most experienced bash guru at it but let me see...

• does the while condition have to be within [ ] brackets?
• Also I can't figure out what your condition is, it seems to have an unclosed quotation mark.
• Most bash while-do-done loops I've made have a comparator like -ne for not equal or -le for less or equal to. So for example: while [ $variable -ne 5 ]; do

Your find statement is not creating a variable "file" because it's missing the first part of the for loop. This:

find ./ -type f \( -iname \*.jpg -o -iname \*.png \) | while IFS= read -r -d '' file; do

should be this:

for file in "$(find ./ -type f \( -iname \*.jpg -o -iname \*.png \))"; do

However, the above command would find all files in current and subdirectories. You can just evaluate current context much more simply. I tested the below, it seems to work.

#! /bin/bash
echo "This script will rename all files in this directory with unique names. Continue? (Y/N)"
read proceed
if [[ "$proceed" == "Y" ]]; then
	echo "Proceed"
               for file in *.{jpg,JPG,png,PNG}; do
                    echo "in loop"
                    echo "$file"
                    dir=$(dirname "$file")
                    base=$(basename "$file")
                    echo "'$dir'/'$base'"
                    new_name="$dir/$(uuidgen -r)"
                    echo "Renaming ${file} to ${new_name}"
                    #mv "$file" "$new_name" #uncomment to actually perform the rename.
               done
	echo "After loop"
else
	echo "Cancelling"
fi

You could also find matching files first, evaluate if anything is found and add a condition to exit if no files are found.

Edit: who the fuck downvoted this, it literally works and the for loop was the issue.