Why would you think "can't hallucinate" means "can't pick wrong probability of an option" ?

Hallucination is the result of a series of choices of options based on poor predictions of probability (or poor sampling from a probability distribution). As I understand the typesafe approach they’re allowing the set of options to be constrained, but the potential for a misrepresentative probability distribution is still there, and hence so is the potential for “hallucination”.

Yes, but that won't be a hallucination. Same root cause, but IMO it was pretty clear they meant "given options red, green, blue this will never say purple", doesn't mean it still can't misclassify green as blue.