I think the flaw here is equating "smart" with "powerful".
Personally, I think generative AI is scary both when it gets things wrong and when it gets things right. If it was so stupid that it got things wrong all the time and no one cared to use it, then it would be powerless and non-threatening.
But once it crosses a threshold where it's right (or appears to be) often enough for people to find it compelling and use it all the time, then it has become an incredibly powerful force in the hands of millions whose consequences we don't understand. It appears to have crossed that threshold even though it still hilariously gets stuff wrong often.
Making it smarter doesn't walk it back across the threshold, it just makes it even more compelling. Maybe being right more often also makes it safer at an even greater rate, and is thus a net win for safety, but that's entirely unproven.