1) Good current generation AIs are specifically trained to reduce hallucinations. If we had new AI system that happened to not have hallucinations as a side effect of their training, then it would be convincing. But here, it looks like we have built a pocket calculator that answer 7+13 = 14, and on top of it, we added a layer that says "if the input is 7+13, then replace the output by 20". This pocket calculator still does not know how to calculate, we just added a layer to hide its mistakes.
2) Not only "make shit up" is not the same as "hallucination" (either "making shit it" is done when the individual knows it is unreliable, or when the individual was given wrong inputs), but the point is not to say "hallucination implies no consciousness", but "large quantities of hallucinations in situations where a conscious system would be unlikely to hallucinate implies no consciousness"