The issue is that everyone is focusing on verbatim (or "too similar") reproduction.
LLMs themselves are compressed models of the training data. The trick is the compression is highly lossy by being able to detect higher-order patterns instead of fucusing on the first-order input tokens (or bytes). If you look at how, for example, any of the Lempel-Ziv algorithms work, they also contain patterns from the input and they also predict the next token (usually byte in their case), except they do it with 100% probability because they are lossless.
So copyright should absolutely apply to the models themselves and if trained on AGPL code, the models have to follow the AGPL license and I have the right to see their "source" by just being their user.
And if you decompress a file from a copyrighted archive, the file is obviously copyrighted. Even if you decompress only a part. What LLMs do is another trick - by being lossy, they decompress probabilistically based on all the training inputs - without seeing the internals, nobody can prove how much their particular work contributed to the particular output.
But it is all mechanical transformation of input data, just like synonym replacement, just more sophisticated, and the same rules regarding plagiarism and copyright infringement should apply.
---
Back to what you said - the LLM companies use fancy language like "artificial intelligence" to distract from this so they can they use more fancy language to claim copyright does not apply. And in that case, no license would help because any such license fundamentally depends on copyright law, which as they claim does not apply.
That's the issue with LLMs - if they get their way, there's no way to opt out. If there was, AGPL would already be sufficient.
I agree with your view. One just has to go into courts and somehow get the judges to agree as well.
An open question would be if there is some degree of "loss" where copyright no longer applies. There is probably case law about this in different jurisdictions w.r.t. image previews or something.
I don't think copyright should be binary or should work the way it does not. It's just the only tool we have now.
There should be a system which protects all work (intellectual and physical) and makes sure the people doing it get rewarded according to the amount of work and skill level. This is a radical idea and not fully compatible with capitalism as implemented today. I have a lot on my to-read list and I don't think I am the first to come up with this but I haven't found anyone else describing it, yet.
And maybe it's broken by some degenerate case and goes tits up like communism always did. But AFAICT, it's a third option somewhere in between, taking the good parts of each.
For now, I just wanna find ways to stop people already much richer than me from profiting from my work without any kind of compensation for me. I want inequality to stop worsening but OTOH, in the past, large social change usually happened when things got so bad people rejected the status quo and went to the streets, whether with empty hands or not. And that feels like where we're headed and I don't know whether I should be exited or worried.