Rosetta 2 is not installed on M1
The terminal is likely lying to you - the error message should say, “Rosetta is already installed” when I see that. If you are sure you don’t have Rosetta and it’s not running and you did get a new Intel app after the error, one lpotential cause of that error is if your network has failed to deliver the update from Apple content delivery network (hard to tell if CDN is overloaded or it’s your network with one try, though).
I would restart the machine and try again. If the error persists, you may need to try a different network or look at reinstalling the OS or troubleshoot further.
A call to Apple support to escalate to engineering may be needed if they don’t fix this “issue” of the installer messaging.