not working due to hallucinations

It's pretty clear that hallucinations are an issue only for specific use cases. This problem certainly doesn't make ML useless. For example, I find it's far faster to use a code oriented model to get an idea of how to solve a problem than going to stack overflow. The output of the model doesn't need to be perfect, it just needs to get me moving in the right direction.

Furthermore, there is nothing to suggest that the problem of hallucinations is fundamental and can't be addressed going forward. I've linked an example of a research team doing precisely that above.

wasteful in terms of resources

Sure, but so are plenty of other things. And as I've illustrated above, there are already drastic improvements happening in this area.

creates problematic behaviors in terms of privacy

Not really a unique problem either.

creates more inequality

Don't see how that's the case. In fact, I'd argue the opposite to be true, especially if the technology is open and available to everyone.

and other problems and is thus in most cases (say outside of e.g numerical optimization as already done at e.g DoE, so in the “traditional” sense of AI, not the LLM craze) better be entirely ignored.

There is a lot of hype around this tech, and some of it will die down eventually. However, it would be a mistake to throw the baby out with the bath water.

what I mean is that the argument of inevitability itself is dangerous, often abused.

The argument of inevitability stems from the fact that people have already found many commercial uses for this tech, and there is a ton of money being poured into it. This is unlikely to stop regardless of what your personal opinion on the tech is.