Marginal utility only drops because effective context is really bad, i.e. most models still vastly prefer the first things they see and those "needle in a haystack" tests are misleading in that they convince people that LLMs do a good job of handling their whole context when they just don't.

If we have the effective context window equal to the claimed context window, well, I'd start worrying a bit about most of the risks that AI doomers talk about...