I like the idea of calling the set "Illusion Domination" to separate it from "Illusion Control".
Spectral Wounds: I would prefer to keep it in the set. In my opinion the prismatic skulls and the damage that goes away after a while are Iconic to Illusion. Maybe for Illusion Domination, a higher percentage of the damage inflicted heals after 10 seconds?
Group Invisibility: I agree that it doesn't exactly fit a Dominator's flavor. I like the idea of "Smoke and Mirrors", especially if it could proc confuse. Here are two more ideas:
Chicanery - Placate, with a duration between that of a Stalker and the pool power "Pacify"
Shifting Images - Click power, point blank AoE. Grants yourself and allies a chance to proc a short duration Confusion on attacks. Kind of like granting Cognitive Interface without the damage.
Phantom Army: Replacing Phantom Army with a remix of Gang War sounds so awesome I worry that balancing the power would be a challenge. With a name like "Phantasmagoria" I almost think that the summoned critters should have Touch of Fear instead of the high Threat, and maybe prefer to fight in melee? Maybe Haunt is a good power to look at for ideas? Or hey, @Steampunkette's "Phantasmal Killers" looks like a good way to go too!