I'm not sure where you think I'm giving it too much credit, because as far as I read it we already totally agree lol. You're right, methods exist to diminish the effect of hallucinations. That's what the scientific method is. Current AI has no physical body and can't run experiments to verify objective reality. It can't fact check itself other than be told by the humans training it what is correct (and humans are fallible), and even then if it has gaps in what it knows it will fill it up with something probable - but which is likely going to be bullshit.
All my point was, is that to truly fix it would be to basically create an omniscient being, which cannot exist in our physical world. It will always have to make some assumptions - just like we do.