I think you're spot on here. It's the same idea as scammers and con artists; people can be convinced of things that they might rationally reject if the language is persuasive enough. This isn't some new exploit in human behavior or an epidemic of people who are less intelligent than before; we've just never had to deal with the amount plausible enough sounding coherent human language being almost literally unlimited before. If we're lucky, people will manage to adapt and update their mental models to be less trustworthy of things that they can't verify (like how most of us hopefully don't need to be concerned their older relatives will transfer their bank account contents to benevolent foreign royalties with the expectation of being rewarded handsomely). It's hard to feel especially confident in this though given how much more open-ended the potential deceptions are (without even getting into the question of "intent" from the models or the creators of them).
My belief is that the function of a story is to provide social cover for our actions. Other people need to evaluate us (both in the moment and after the dust has settled) and while careful data analysis can do the job, who has time for that crap.
As such the story can be completely divorced from reality. The important thing is that the story is a good one. A good story transfers your social cover for yourself to your supervisor. They don't have to understand what you did and explain why it's okay that it failed. They just have to understand the story structure that you gave them. Listen to this great story, it's not my report's fault for this failure, and it's certainly not mine, just bad luck.
Additionally, the good (and sufficiently original) story is a gift because your supervisor can reuse it for new scenarios.
The good salesman gives you the story you need to excuse the purchase that will enable you to succeed. The bad salesman sells you on a story that you need a frivolous purchase.
And this is why job hoping is "bad". Eventually the incompetent employee uses up all of their good stories and management catches onto their act. It's embedded into our language. "Oh we've all heard this story before." The job hopper leaves just as their good stories are exhausted and can start over fresh at the new employer.
All of this in response to
> If we're lucky, people will manage to adapt and update their mental models to be less trustworthy of things that they can't verify
Yes, if we're lucky that is what will happen. But I fear that we're going to have to transition to a very low trust society for that to happen.
Reliance on the story is reliant on the trust that someone has done the real work. Distrust of the story implies a wider scale distrust in others and institutions.
Maybe we can add a tradition of annotating our stories with arguments and proofs. Although I've spent a two decade career desperately trying to give highly technical people arguments and proofs and I've seen stories completely unmoored from reality win out every time.
Optimistically, I'm just really bad at it and it's actually a natural transition. Pessimistically, we're in for a bumpy ride.