But it's definitely distasteful to write a book about a living individual without their consent (even though this does happen all the time; technically Wikipedia does this too).

I do wonder about what would happen if the LLM were to hallucinate negative facts about the person.

Like, if some asshat vibe-wrote a biography about me that claimed that I once kicked a sack full of puppies as a child, would I be able to sue the "author" for defamation? At least, would it even be worth it to pursue?