Calling it an illusion forces a sort of re-defining upon the word itself. Life is just a word that our language uses to identify a thing and although it somewhat vague in some senses, for the most part a child could point to an object and ask if it is life or not and you'll be able to provide a clear-cut answer.
You touched on this and perhaps lets just look at matter as matter - throw the concept of alive, dead, animate, inanimate, etc completely out the window. Rather, lets just say there is a molecular structure with characteristics of interest you wish to understand.
Viruses and prions are components of this molecular structure too as they directly interact with this molecular structure of interest.
Now, this "molecular structure" is a single entity - not the seperate individuals (such as people, butterflies, fish, etc) - as they are all confined to the boundaries of the planet of which they exist. The planet's environment also affects the nature and structure of this molecule, and vice versa too.
In this view, "life" could be defined as the entire planet and I wouldn't be inclined to say is an illusory perspective. It just depends on your definition of the word.
The molecular structure of life today is assuredly of vast difference compared to when it originated. It probably didn't even resemble any of the biochemical structures we are accustomed to identifying today.
Consider the events of a typical star for a moment. Initially its pieces are scattered and over time through gravitation they coalesce. These pieces are the simplest form of matter but eventually enough of these atoms gravitate together and something amazing occurs - they start bonding together to create more complex forms of matter. The process is self-sustaining and over time produces ever increasingly complex forms of matter.
Now imagine for a moment you aren't privvy to the natural processes involved in star formation or the dynamics occuring within stars throughout their lifetime. Even if you were to look at the materials and conditions existing within a middle-aged star do you think it would be fair to say that the knowledge gained from just observing the star's current condition would lack the insight into the process of fusion which gave rise to that condition?
What I am getting at here is that we can look at the current structure of life that exists today and break it down into its constituents but at some point there exists a "jump" in material characteristic that just cannot be revealed by this top-down scrutiny? Again, I'm falling back on the phenomena of fusion that occurs within a star and the inability to know that the process of fusion even exists as a character of matter unless it is observed.
Interestingly enough, we can see matter that exists in the form of "inanimate" as well as "animate", or, "living" vs. "non-living". The hangup I see within this post is only a simple matter of definition which is why I suggest to look at it simply from a perspective of behaviour the "stuff" you are describing exhibits. You cannot express your thought from both the observer and the object at the same time - seperate yourself from the object entirely.
In the end, "life" is easy to define. What is making it difficult for you is trying to define "life" from a "non-life" perspective. You are entangling the fact that you, yourself, ARE "life" with the need to present your definition of life from a "non-life" perspective. In turn, becoming confounded within yourself and expressing only that fact rather than clearly defining "life" itself, which I am sure everyone here could identify if a 6-year old were to point to it.
Edited by AshsZ, : simple edit
Edited by AshsZ, : clarifying edit