I'm not sure why but the new spell "Phantoms of Deception" consistently causes faction issues, causing blue NPCs to become red. The illusory copies themselves sometimes turn red and attack randomly.
Tis is the same as with Displacement illusions.
The spell works by:
Creating a copy NPC
Dominating it right after so you can control it
If your darkness hits it between summon and domination all NPC's will become hostile to you for the rest of the reset. 10 minute log out etc wont work.
I have no idea how these things work but maybe the copies could be made immune to darkness (which after all is an automatic part of the spell) so it doesn't hostile them?