"Hallucination" is a widely understood and accepted term in the LLM industry. If you want to change that, replying to my comment doesn't seem to be the most effective place to start. I don't know that it's the best term, but it seems better than re-explaining the issue in detail every time.

"Incorrect output" is broader, encompassing other failure modes. If you ask an LLM to respond in JSON with a list of common foods, and it instead writes a paragraph of text that contains a list of common foods, then that would not qualify as a "hallucination" by my understanding of the accepted definition, but it is still "incorrect output".