No, LLMs can't write good novels and they won't be able to in the future. Yes, LLM-produced text is going to show up in all kinds of places where it doesn't belong. Having an LLM write an entire novel from a single prompt and then selling it for money through self-publishing is a kind of asset-flipping and it is a scam. I think this is the use people are the most upset about.
This is an interesting article because it's not featuring a scammer, but featuring a professional writer who has decided to use LLMs to assist her in writing including using LLM-produced passages in the context of her original writing. This is much more of a gray zone to me and not actually something I'm necessarily opposed to.
One of the first things I did with an LLM was to have it convert my silly ideas into iambic pentameter and it was a lot of fun. I didn't tell it, "write a poem in iambic pentameter about X" and then try to sell whatever it gave me. I had it convert each of my descriptions part by part one at a time and often I had to generate several different versions of the same passage before I even had something to clean up. Some of what ended up in the finished product was directly from the machine, but most of it I had to re-write. It was interesting to experiment with.
The difference between a scamming people and using an LLM as a tool is reflected in the finished product. A writer has to know what works and what doesn't work because most of what the machine will give is not going to be usable as-is, and if it is usable it is by happenstance as it happened to conform with what the writer was trying to express at that moment. A human mind is still absolutely necessary to write something someone would want to read, especially if they are choosing whether to read it, and I don't see that changing with what these models are capable of or possibly capable of. This being the case there are probably going to be some distinctive traits of LLM-produced stuff that people will probably pick up on and get tired of. I'm interested to see how all art develops in a direction to distinguish it from what LLMs can produce such as when painting diverged significantly after the invention of the camera.