A lot of the things mentioned can be just as easily explaned with other, sometimes simpler reasons, though.
I think Lily has doo much of a personality to her to assume Bo didn't want to work on her. The core idea of good/bad duality is solid and it gets executed nicely, which is more important than the presence or lack of a brand new mechanic. Makes more sense for her to be a younger girl too, since the tower milfs™ are all unquestionably evil.
I can totally see what you mean about Lily having a lot of personality. And I think that's made even more apparent when you take a good look at the rest of the cast and notice how one-dimensional some of the other girls really are. This is why people really like it when we get little character moments like when Khulan blushes if you compliment her smile, since it's very rare that a girl shows a new side to them in this game. It could also explain Lily's popularity, as she's pretty much the only girl in the game with anything that resembles a character arc.
So I guess Lily's character depth compared to the other girls + her not being a MILF (Biiig plus for me) + her being the first girl to be teased so prominently before her time is up, even ending in a cliffhanger TWICE, all turned into the perfect storm to make her a huge breath of fresh air and a big HYPE machine.
All these reasons to like Lily were present before Part 2 of F5 was released too, so it makes sense that people would've made up their minds on how amazing she is and just enjoyed her great CGs without caring too much for her mechanics.
Given that her biggest strength is how she was written, I guess that her "affinity" mechanic does suit her well, but I don't believe it can be said that it was executed well. When Lily dropped, all that mechanic did was change how she fought a little bit, it barely changed any dialogue. And by the time the dialogue changes were added, they didn't feel like a fresh experience to me, maybe because of how long it took them to implement something that should've been there from the start. There's also the time issue.
TLDR: Lily was made great in Part 1 of F5, so it makes sense that they could've released a not-so-good-mechanically Part 2 to F5 without people noticing/caring, since all they wanted to do was enjoy her debut, e̶v̶e̶n̶ ̶i̶f̶ ̶i̶t̶ ̶m̶a̶y̶ ̶h̶a̶v̶e̶ ̶n̶o̶t̶ ̶m̶a̶d̶e̶ ̶h̶e̶r̶ ̶j̶u̶s̶t̶i̶c̶e
CLARIFICATION: Even though I complain a lot, I do realize you can't get everything right all the time, no matter the type of game, so if shoddy mechanics are somehow a direct result of the improved writing, then I'm fine with them. For me, even though they all matter, it's CGs>Story/Characters>Game Mechanics