Some basic investigatory police work (the kind they did before AI) would have revealed the mistake before an innocent woman’s life was destroyed.
The article says that the Fargo police claimed to have done "additional investigative steps independent of AI". (Perhaps they're lying, or did a poor job because they thought the extra steps were a formality.)
Yes. But doing the investigation negates much of the incentive for using AI.
Look for similar to play out elsewhere --- using unreliable tools for decision making is not a good, responsible business plan. And lawyers are just waiting to press the point.