AI is going to implode within 2 years. Once it starts ingesting its own output as training data it is going to be at best capped at its current capability and at worst even more hallucinatory and worthless.
The mistake you make here is to forget that the training data of the original models was also _full_ or errors and biases — and yet they still produced coherent and useful output. LLM training seems to be incredibly resilient to noise in the training set.