AI will indeed kill the leetcode interview - because once it replaces human SWEs you don't really need to give leetcode-style brainteasers to any human anymore.
Not defending it but I think it was more of a test if you have the dedication (and general smarts) to grind them for a few months than software engineering skills.
Similar to hiring good students from famous universities even if most of CS isn't that applicable to day to day programming work, just because it's a signal that they're smart and managed to get through a difficult course.
Are you sure? From my experience, no AI assistant is fast enough to handle fast-paced questions on the code the candidate just wrote. Also, frequent requests to adjust variable names and deactivating pasting on the page make it extremely laborious for the candidate to get AI to modify the code on the screen.