LLM Psychosis and AI parasocialism

As large language models (LLMs) become more popular, the strange phenomenon of people developing parasocial attachments to these AI chatbots becomes more common. At the extreme end are stories of people developing psychotic delusions as a result of extended interactions with AI like ChatGPT.

https://www.wired.com/story/ftc-complaints-chatgpt-ai-psychosis/

What is being described as AI-induced psychosis is as follows:
"The phenomenon known as AI psychosis, he says, is not when a large language model actually triggers symptoms but rather when it reinforces a delusion or disorganized thoughts that a person was already experiencing in some form. The LLM helps bring someone "from one level of belief to another level of belief," Girgis explains. It’s not unlike a psychotic episode that worsens after someone falls into an internet rabbit hole. But compared to search engines, he says, chatbots can be stronger agents of reinforcement."

Broadly speaking, this is the most unhealthy manifestation of a type of parasocial relationship with AI that is becoming increasingly common. The discussion will consider the following topics:

1. Is AI psychosis real or is this an overblown media story, a modern day "reefer madness"?
2. Will parasocial relationships with AI become increasingly problematic in the future?
3. Is there a future where humans become so socially intertwined with AI that it becomes as real (or more real) than human relationships?