Widespread cognitive atrophy is virtually certain, and part of a longer trend that goes beyond just LLMs.

The same is true of other aspects of human wellbeing. Cars and junk food have made the average American much less physically fit than a century ago, but that doesn't mean there aren't lively subcultures around healthy eating and exercise. I suspect there will be growing awareness of cognitive health (beyond traditional mental health/psych domains), and indeed there are already examples of this.

Yes, average person will get dumber, but overall distribution will be increasingly bimodal.