I've always found that take quite ridiculous. Fake videos have existed for a long time. This technology reduces the effort required but if we're talking about state actors that was never an issue to begin with.
People already know that video cannot be taken at face value. Lord of the rings didn't make anyone belive orcs really exist.
Lord of the Rings had a budget in the high millions and took years to make with a massive advertising campaign.
Riots happen due to out of context video clips. Violence happens due to people seeing grainy phone videos and acting on it immediately. We're reaching a point where these videos can be automatically generated instantly by anyone. If you can't see the difference between anyone with a grudge generating a video that looks realistic enough, and something that requires hundreds of millions of dollars and hundreds of employees to attain similar quality, then you're simply lying.
A key difference in the current trajectory is its becoming feasible to generate highly targeted content down to an individual level. This can also be achieved without state actor level resources or the time delays needed to traditionally implement, regardless of budget. The fact it could also be automated is mildly terrifying.
Coordinated campaigns of hate through the mass media - like kicking up war fever before any major war you care to name - is far more concerning and has already been with us for about a century. Look at WWII and what Hitler was doing with it for a clearest example; propaganda was the name of the game. The techniques haven't gone anywhere.
If anything, making it cheap enough that people have to dismiss video footage might soften the impact. It is interesting how the internet is making it much harder for the mass media to peddle unchallenged lies or slanted perspectives. This tech might counter-intuitively make it harder again.
I have no doubt trust levels will adjust, eventually. The challenge is that takes a non-trivial amount of time.
It's still an issue with traditional mass media. See basically any political environment where the Murdoch media empire is active. The long tail of (I hate myself for this terminology, but hey, it's HN) 'legacy humans' still vote and have a very real affect on society.
It's funny you mention LotR, because the vast vast vast majority of the character effects were practical (at least in the original trilogy). They were in fact, entirely real, even if they were not true to life.
You can still be enraged by things you know are not real. You can reason about your emotional response, but it's much harder to prevent an emotional response from happening in the first place.
The issue is not even so much generating fake videos as creating plausible deniability. Now everything can be questioned for the pure reason of seeming AI-generated.
People already know that video cannot be taken at face value. Lord of the rings didn't make anyone belive orcs really exist.