The interface makes it appear that the AI is sapient. You talk to it like a human being, and it responds like a human being. Like you said, it might be impossible to avoid ascribing things like intentionality to it, since it's so good at imitating people.
It may very well be a stepping-stone to AGI. It may not. Nobody knows. So, of course we shouldn't assume that it is.
I don't think that "hallucinate" is a good term regardless. Not because it makes AI appear sapient, but because it's inaccurate whether the AI is sapient or not.