I agree with most of what you said, but I think I was not clear in my presentation of the domain of operations. I was not speaking to the rewriting of an existing system, but if gathering requirements for a system that is intended to replace existing manual systems or to create systems for brand new tasks.
That is, there is no existing code to work with, or at least nothing that is fit for purpose. Thus, you are starting at the beginning, where people have no choice but to describe something they would like to have.
Your reference to hallucination leads me to think that you are limiting your concept of AI to the generative large language models. There are other AI systems that operate on different principles. I was not suggesting that a G-LLM was the right tool for the job, only that AI could be brought to bear in analyzing requirements and specifications.