So the verb is "bullshitting" which does an even worse job of avoiding anthropomorphizing or attributing sentience to the model. At least "hallucinating" isn't done with conscious effort; "bullshitting" implies effort.
I think we really need a new word for this process because it really is just not comparable to anything previously.
Unfortunately, "hallucinate" is a horse that has left the barn with seemingly no possible way of replacing the horse at this point.