there's usually a test for originality, and it involves asking things (from the jury) like, is it transformative enough?

so if someone tells the LLM to write it in WASM and also make it much faster and use it in a different commercial sector... then maybe

since 2023 the standard is much higher (arguably it was placed too low in 1993)

Because copyrights do not protect ideas. Thankfully. We are free to express ideas, as long as we do so in our own words. How that principle is applied in actual law, and how that principle is a applied to software is ridiculously complicated. But that is the heart of the principle at play here. The law draws a line between ideas (which cannot be copyrighted), and particular expressions of those ideas (e.g. the original source code), which are protected. However, it is an almost fractally complicated line which, in many place, relies on concepts of "fairness", and, because our legal system uses a system of legal precedence, depends on interpretation of a huge body of prior legal decisions.

Not being a trained lawyer, or a Supreme Court justice, I cannot express a sensible position as to which side of the line this particular case falls. There are, however, enormously important legal precedents that pretty much all professional software developers use to guide their behaviour with respect to handling of copyrighted material (IBM vs. Ahmdall, and Google v. Oracle, particularly) that seem to suggest to us non-lawyers that this sort of reimplementation is legal. (Seek the advice of a real lawyer if it matters).

Taking a step back, it seems fairly clear that wherever you set the bar, it should be possible to automate a system that reads code, generates some sort of intermediate representation at the acceptable level of abstraction and then regenerates code that passes an extensive set of integration tests … every day.

At that point our current understanding of open source protections … fails?

Depends whether you sit on the MIT half of open source, or the GPL side of open source, I suppose.