Yes, degree inflation is nothing new. I remember my uncle telling me how difficult his high school graduation exams were and how easy they got later.

We already had private school giving diplomas to politicians without attending any classes (I know about such instances in Spain and Poland). With AI getting some type of a degree will be just a formality for most people. No idea if it's an issue or not. If employers want to use degree as a proof for anything they will have to verify which ones mean something. If they don't care then I guess no one will.

Depends. 1 for many vocational degrees, 2 for most academic or engineering. Also usually only the 1s accommodate completion by working professionals. 2s tend to assume full-time study.