Being suspicious would be reasonable and I think a penalty could perhaps be appropriate but the person you're replying to is objecting that the stated hypothetical would not rise to the bar of negligence.

Do bear in mind the degree of the described scenario. There's quite a difference between having an LLM shit out your entire citation section (and possibly the rest of the paper as well) versus asking the tool to make a targeted edit and overlooking a small piece of nonsense that results.