Rather than a paradigm shift or hype, I see distributed SQLite as an extension of a path that devs can go down. With Litestream, the most common complaint I got was that devs were worried that they couldn't horizontally scale with SQLite and they'd be stuck. While you probably won't hit vertical scaling limits of SQLite on most projects, it still caused concern. So LiteFS became a "next step" that a dev could take if they ever got to that point. It doesn't need to be your starting point.
As for the "hacky" solution of txid, I'm not sure why that's hacky. Your application isn't required to use it or the optional built-in proxy but it's available if it fits your application's needs. It also works for plugging legacy applications into distributed SQLite without retrofitting the code. The proposed solution of caching seems orthogonal to the discussion of distributed application data. I don't think any database provider would suggest to avoid caching when it's appropriate but there's plenty of downsides of caching. Hell, it's one of the two hardest problems in computer science.