WallOfIceBear

I just ran into the same issue. I turned invisible to sneak in and kill the skeleton priest and something pulled me out of invisibility and started combat, I didn't realize it was a cut scene, and then Yatzli wouldn't dispel the illusion. Luckily I had saved right before the fight so I just reloaded, let the skeletons approach me before killing them, and then the cutscene played out and Yatzli could dispel properly. So reloading an older save works, but I hope they fix the bug soon for those who either can't or don't want to lose progress to reload.