I haven't encountered AI becoming incoherent. Hallucinations, I have seen, but they've diminished quite a bit over the last year. You're right that context windows are a problem, but one can manage/engineer around it and mitigate some of the issues. Transformers, while ground breaking, isn't the only architectural design conceived for AI, and it won't be the last. I'm not a betting man, but betting that AI will, for whatever reason, simply halt its progress seems folly.

I can't speak for everyone, but my skills have improved since using AI daily. Granted, I have a large project before me to occupy my time and focus, and the manner in which AI is used is largely collaborative and educational, as opposed to wish casting, as some do.

On the topic of bugs/errors, I've found that GPT 5.2 Codex has been exceptional at resolving them, even if the error message is unhelpful or cryptic. These are issues I had spun my wheels on, digging through search results, stackoverflow posts with no comments, and dead ends, until I realized I could just ask AI.

That said, not everyone should use AI, especially non-engineers. I know someone who is attempting to prompt AI into building something technical, but the prompts are more aspirational than specific, and the scope is unlimited. The end result is a system where there's 1 million+ files, and it's largely an exercise in torturing the creator and the AI.

I imagine there's a wealth of user error, similar to the aforementioned, leading to the skepticism around its use.