I don't personally think there's necessarily anything wrong callin LLM an AI. After all; autocorrect could be considered an AI aswell. The main issue is that people speak of AI when they actually mean AGI or ASI. That's why they have unrealistic expectation from things like GPT4.
Wether the LLM route is a dead end I have no idea. It might but it might not. Because LLMs sometimes makes mistakes that are so obvious to us humans it seems to make many people dismiss it as fundamentally flawed but I don't think we're giving it the credit it deserves. Humans make mistakes aswell but if there was a person with an equivalent capability to source expert level knowledge on such an insanely wide range of topics it would seem insane to describe them anything else but a genious.