In case you want to know the real meaning behind this already complex level and clear up confusions. (that I couldn't find a way to include directly or indirectly)
Paradise 770 and Hell 770 are separates universe but within a same level.
Both universe are controlled by entity 997-A (refered as God).
The entity can actually communicate with peoples if it wants to, as mentionned in the "our dearest creator" transcription. Entity 997-A having read Overseer S mind knew his motives and decided to communicate with him and only him thus why he was aware of the pit and stuff that the other peoples shouldn't know about paradise 770.
Paradise 770 present the goodwill of the entity is benevolent toward what it thinks deserves it : the entities and the humans that has beliefs similar to Liberation and the reverence hence why the entity doesn't attack any Liberation member in paradise 997.
Hell 770 on the other hand is the evil side of the entity that punishes whoever is thrown into the pit. (by the Liberation members who acts as God's apostles).
To conclude, paradise 770 is not an illusion and is real. Hell 770 is the alternate universe of "Heaven". The entity cannot shift "heaven" to "hell" by itself and actually requires the person to get thrown into the pit.
Entity 997-A is a god like entity with no confirmed form that influence Liberation in some extend. The entity reside and control all the levels within the separate space presented in Level 997 but its powers are also limited to this space and thus relies on Liberation to spread "Heaven" into the rest of the backrooms.
