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And doing it manually is probably cheaper in the long run, especially considering that COBOL tends to power some very mission critical tasks, like financial systems.
The process should be:
If you already have a robust test suite, step 2 becomes much easier.
We're doing this process on a simpler task of going from Flow (JavaScript with types) to TypeScript, but I did a larger transition from JavaScript to Go and Ruby to Python using the same strategy and I've seen lots of success stories with other changes (e.g. C to Rust).
If AI is involved, I would personally use it only for step 2 because writing tests is tedious and usually pretty easy to review. However, I would never use it for both step 2 and 3 because of the risk of introducing subtle bugs. LLMs don't understand the code, they merely spot patterns and that's absolutely not what you want.