I think you have the right observation but the wrong conclusion.

The appeal of digital systems, at a social level, is that they can transmit information accurately for almost no marginal cost. They come at the risk of fraud.

With AI the levels of risk have increased. Anyone can now be a fraudster, and it gets harder and harder to prove anything online. Either of us two, in this conversation, could be a well tuned LLM.

So society, collectively and at an individual level, is forced to reassess reliance on purely digital information. Which means that the advances in the technology, actually end up reducing the utility of digital systems more generally.

You can argue that this makes education costly and less accessible. It does. It absolutely does. There is also no alternative except to see higher education get wiped out, which would have devastating economic and social effects.

So we are going back to blue books and vivas.

"So we are going back to blue books..." exactly. And, it is also efficient. You just need a proctor to ID the test taker and make sure they aren't using AI to cheat in order to verify that the student learned something which seems like a good idea.