The fifth season had a big theme about the meaning of power. This did show up in Angel vs. Spike, and fit on the meaning of W&H. How power can shake when someone just proves they can't control everything (the point of the last episode). So Illyria makes perfect sense.
She was a god, had so much control and everyone and everything worshipped her. She found her kingdom gone in "Shells" and even had most of her power taken away from her in "Time Bomb". Illyria is the symbol for loss of power, the things she once knew as maggots are taking hold of her, and painful truth of a beaurocratic conglomerate running the universe unlike a kingdom should. This contributes a large amount with the fifth season, from the emotional arcs of Angel in the appearance of Spike and especially showing what Wolframm & Hart truly is, and finally the outcome of the final episode to "prove this power wrong". Illyria is the emotional representation of a fallen god.
She fits
She was a god, had so much control and everyone and everything worshipped her. She found her kingdom gone in "Shells" and even had most of her power taken away from her in "Time Bomb". Illyria is the symbol for loss of power, the things she once knew as maggots are taking hold of her, and painful truth of a beaurocratic conglomerate running the universe unlike a kingdom should. This contributes a large amount with the fifth season, from the emotional arcs of Angel in the appearance of Spike and especially showing what Wolframm & Hart truly is, and finally the outcome of the final episode to "prove this power wrong". Illyria is the emotional representation of a fallen god.