Why didn Lars just tell Lily the “big secret” using his image?
If he told her the “secret”, I bet Lily’ll go running off to William to ask if it’s true. Then William might go do what his father had always wanted to do: Throw Lars out of that cursed house and get rid of him for good. Lars knew that, and that’s why he told Lily who he was at the end, when William is being led to his death. This is sort of mentioned on the little message sending trip to William’s uncle, who is the Leader on Lily’s side of Yonder. William’s uncle mentions about pulling “the magician” out of the cursed house if he interfers too much.