I ended up making Illaris a red herring. My PCs had already been betrayed by a Technic League agent (posing as a PC, no less) in the first book, and I wanted to keep that fresh in their mind. And send them on a merry little chase.
So they found out that there was a Technic League spy in town... and then they found a lot of evidence that Illaris was a spy.
Lucky for them, they confronted her themselves instead of turning her in to the town, and were able to find out that she is a spy... for New Thassilon*, not the Technic League. And she was able to lead them to evidence that the agent who had already betrayed them was the spy they were looking for. They are now eagerly seeking their revenge, and Illaris has joined as a cohort (and something of a romantic fling for one of the PCs).
*My players and I have a rule that all APs we run are canon in all future APs, no matter how things turn out. Kingmaker and (especially) Shattered Star had some... unconventional... endings, so the Golarion I am running this AP in looks fairly different from the standard.