1) Alex Graves on Hallucination with Recurrent Neural Networks, a 2015 lecture at the University of Oxford from a course by Nando de Freitas (highly recommended).
http://www.creativeai.net/posts/kp4bTG993JTQcqy2d/alex-grave...
2) Generating Sequences With Recurrent Neural Networks
https://arxiv.org/abs/1308.0850
"Assuming the predictions are probabilistic, novel sequences can be generated from a trained network by iteratively sampling from the network’s output distribution, then feeding in the sample as input at the next step. In other words by making the network treat its inventions as if they were real, much like a person dreaming."
There are other terms, such as Imagination, also used in the literature:
3) Imagination-Augmented Agents for Deep Reinforcement Learning
https://arxiv.org/abs/1707.06203
4) Uncertainty-driven Imagination for Continuous Deep Reinforcement Learning
http://proceedings.mlr.press/v78/kalweit17a/kalweit17a.pdf
In our work, the procedure is closer to the approaches in (1) and (2), rather than the "Imagination" approach in (3) and (4) where there are more subtle differences (i.e. planning), so we followed the terms in (1) and (2).
It seems to have coincided with the re-emergence of neural networks and the only way I can see it is that it romanticizes the field in the expense of some accuracy of statement.
I however definitely can't claim to be immune to the charm of this romanticization, it surely appeals to something inside me.
Hallucination on the other hand, is a less defensible use here. Hallucination refers to when predictions overwhelm sense input. Since their agent was not behaving in a way uncorrelated with its inputs, such as its predictive model overriding input data, it doesn't qualify as hallucination.
I also don't think it's the author of the paper's job to manage hype.
Basically, the deep learning hype in popular science media, owes this status in large part, because it allows nice pictures to be shown. RL research fares well, because they can show video of the agent playing the game. I bet the choice of Doom was also made with this PR in mind, and of course publications like Wired are going to show this work to their readers, over, say, the RELU-paper (impactful in the field, but not much to write an article around).