This is exact the impression that I got. Every question or task given to LLM returns pretty reasonable, but flawed result. For the coding, those are hard to spot but dangerous mistakes. They all look good and perfectly reasonable, but just wrong. Anthropic compared Claude Code to a "slot machine", and I fell that AI coding now is something close to gambling addiction. As small wins keep gambler to make more bets, so correct results from AI keep developers to use it: "I see it made correct solution, let's try again!"
At a startup CTO, I review most of the pull requests from team members, and team uses AI tools actively. The overall picture strongly confirms your second conclusion.
If someone gives you access to a slot machine which is weighted such that it pays out way more than you put into it, my advice is to start cranking that lever.
If it does indeed start costing more than it's paying out, step away.
