Yes, but often the easiest way to deduce the limits of "what" is understanding the "how".

Agree mostly, though there is a diminishing return on the quality of the model vs model size.

I also think there will be plenty of AI consult companies focused on providing and training models for narrow product uses like medical, legal, customer support etc.

Any vulnerability would be patched, most things are controlled on server side so I don't know what kind of "cheat" you are referring to.