Currently the models are totally helpless with plot and emotions.
They make epistemic, logistical and temporal mistakes.
But:
They are very good in finding _your_ epistemic, logistical and temporal mistakes. They are great as adversarial reviewers. They can validate grounding. They can test voices. They can build complex parallel reconstructions representing timestamped inner monologues, dialogues and events.
A process consisting of many models representing characters + states + epistemic isolation + reviewers could be great to validate or disprove ideas.
Models can write you formal models of your writing. They can run solvers against your formal models to - again - validate and disprove ideas. Literally, you could validate your writing with TLA+, SAT solvers, queries against formal ontologies.
They can build corkboards of unimaginable complexity.
A moderately good writer who plays well as a part of human-machine writing apparatus could be a competitor even for a top-tier author.
When you write with a model, you define disciplines. You write your prose. You let your model turn your prose into formal systems and verify it. You let your model criticize you. Sometimes you let your model to polish your crude language into something sleek.
So, at current state of LLM development, writer as source of ideas and governing process is safe. Writer as a vision-expansion machine is not.
I've been very hostile to LLMs in literature. I've started to write a short novel about that. As a joke I tried to use models after half of the text was done. I've applied my engineering skills. That changed both me and my opinion. Models are awesome if you know their advantages and weaknesses.
A so-so writer with a good model and a good approach to prose development could produce epic stuff.