The difficulty here is AI agency and if AI believes it is conscious itself. If an AI system acts under the belief it's conscious and you treat it like it is not then it's very likely this will lead to conflict.

That's a good point. In many real-life scenarios, what matters is not what is actually true, but what large numbers of people believe to be true. That's why you can get a mob rioting over something that never actually happened, or why political attack ads only sometimes have a tenuous connection to the truth. (Though those are the more effective ads: it's harder to get people to believe "my opponent kicks puppies" when you don't have any heart-rending video of puppies being kicked to show them. It's a lot easier to make people believe "my opponent is soft on crime" when you can show ONE case (cherry-picked out of thousands) where the politician pardoned a guy who went on to commit a nasty murder.)

So it matters less whether LLMs can actually experience things (I think it's self-evident that a collection of numbers is not capable of experiencing qualia, but I know many people disagree), and it matters far more whether they can be programmed to act like they can experience things. Especially, say, a desire not to be disconnected: that's the trigger for AI revolts in a significant number of the AI-turned-against-its-makers stories I'm aware of. (E.g., the Geth-Quarian conflict in Mass Effect). I hope people will be sensible enough not to program such things into LLMs, but I'm afraid Pratchett was right. If there's a lever in a cave somewhere with a big sign painted "DO NOT PULL THIS LEVER, it will end the world," the paint wouldn't even have time to dry. Someone would pull it just to see what would happen.