STEP-OPD: Rethinking Output Targets and Internal Dynamics in On-Policy Distillation for Diffusion Models

On-policy distillation (OPD) has become an effective approach for consolidating multiple task-specialized image generation models into a single student. However, existing OPD methods optimize the student mainly to match the teacher's output velocity, making the teacher the upper limit of the optimization objective. While output-level supervision alone leaves the student's blockwise representation evolution underconstrained, which weakens the transfer of capabilities that must be progressively developed across layers. We propose STEP-OPD, an on-policy distillation framework for image generation that extends the student's learning target beyond the teacher and introduces explicit constraints on its internal representation evolution. Instead of treating the teacher as the final target, we use the velocity difference between each task-specific teacher and the shared base model as a direction for further learning and add a scaled version of this difference to the teacher velocity. In addition, we align the direction and magnitude of representation changes between the student and teacher, enabling the student to learn how representations are progressively transformed across network blocks. Experiments on compositional alignment, text rendering, and human preference show that our method consistently improves Standard OPD methods. In particular, it increases the GenEval score of DiffusionOPD from 0.927 to 0.961, while also improving OCR and all preference-based metrics. The resulting unified student surpasses the corresponding single-task teachers across all three capability groups, showing that output extrapolation enables beyond-teacher learning. And representation change alignment provides complementary guidance for the student's internal transformations.