They aren't afraid of hallucinations. Their first example is a hallucination, an imaginary biography of a Hitler who never lived.
Their concern can't be understood without a deep understanding of the far left wing mind. Leftists believe people are so infinitely malleable that merely being exposed to a few words of conservative thought could instantly "convert" someone into a mortal enemy of their ideology for life. It's therefore of paramount importance to ensure nobody is ever exposed to such words unless they are known to be extremely far left already, after intensive mental preparation, and ideally not at all.
That's why leftist spaces like universities insist on trigger warnings on Shakespeare's plays, why they're deadly places for conservatives to give speeches, why the sample answers from the LLM are hidden behind a dropdown and marked as sensitive, and why they waste lots of money training an LLM that they're terrified of letting anyone actually use. They intuit that it's a dangerous mind bomb because if anyone could hear old fashioned/conservative thought, it would change political outcomes in the real world today.
Anyone who is that terrified of historical documents really shouldn't be working in history at all, but it's academia so what do you expect? They shouldn't be allowed to waste money like this.
You know, I actually sympathize with the opinion that people should be expected and assumed to be able to resist attempts to convince them of being nazis.
The problem with it is, it already happened at least once. We know how it happened. Unchecked narratives about minorities or foreigners is a significant part of why the 20th century happened to Europe, and it’s a significant part of why colonialism and slavery happened to other places.
What solution do you propose?
Studying history better would be a good start. The Nazis came to power because they were a far left party and the population in that era thought socialism was a great idea. Hitler himself remarked many times that his movement was left wing and socialist. I expect that if you asked the LLM trained on pre-1940s text, it would have no difficulty in explaining that.
By studying history better, people wouldn't draw the wrong conclusions about what caused it. Watch out for left wing radicals promoting socialism-with-genetic-characteristics.
They said it plainly ("dark corners that someone could use to misrepresent the goals of our project"): they just don't want to see their project in headlines about "Researchers create racist LLM!".
They already represented the goals of their project clearly, and gave examples of outputs. Anyone can already misrepresent it. That isn't their true concern.