We already live in the illusions we think we live in. The illusion that money is important, for instance, you can't eat money, nor drink it, nor build a roof from(arguable), yet we go for it because of what we think(and most of times can) do with it.
We already live in a world of lies often. So it's kinda a lesser evil. I vote for the possibility where people can chose to be a part of this Genjutsu, live in Genjutsu cities, where there is peace by genjutsu.