I think I'm on (relatively) the same page as you regarding inappropriately anthropomorphizing LLMs, but aren't both "confabulation" and "hallucination" typically/historically cognitive science terms dealing with humans? So, they both would be anthropomorphizing? And if so, why is one better than the other?
"Confabulation was originally defined as "the emergence of memories of events and experiences which never took place" - From the year 1900