The suggestion is that it is an intrinsic quality and therefore neither a feature nor a bug.

It's like saying, computation requires nonzero energy. Is that a feature or a bug? Neither, it's irrelevant, because it's a physical constant of the universe that computation will always require nonzero energy.

If confabulation is a physical constant of intelligence, then like energy per computation, all we can do is try to minimize it, while knowing it can never go to zero.