Without Mr. Lynch here to help us, we may never actually get the whole gist.
But, MY take on it was this
*general disclaimer....my take on things usually is 90% imagination, 2% fact and the other 8% things that are going on around me at the time.
Illyria was going a bit wonky whether from the effects of the hell dimension or from her grief and trying to come to terms with Wesley's death....or both.
There was a part of her who really wished that Wesley had been missing HER instead of Fred at the end of NFA, like she was missing him. And in her head, she decided that if she was more Fred like, the people around her would see her differently than just an unfeeling "thing" that had killed their friend.
I don't think she was changing on purpose. More like when something triggered a memory of Fred's or reminded her of something in Fred's life, she kinda automatically morphed back into Fred so that she could feel it or experience it the way Fred would have. Thus, getting a TINY bit of the humanity feeling that she wished she had.
But, it was never Fred back. More like she just wanted to feel the "love" that Fred had felt.
Which is why when she went nutty, George sending her MORE memories of Fred helped her see that killing everyone was NOT what Fred would do and tripped her up.
Honestly, as much as I would want Fred back, I thought the way the story went made me feel for Illyria more. I kinda want to give her a big hug!
Of course, that's just my take, it could be far off the mark and makes no one else feel the warm fuzzies for Illyria!