Yes, I remember it was resolved for the viewers when the young man version of god visited her. It was a difficult story arc after things had gone fairly smoothly for a while (during the transition from season 1 to 2, I think). Eventually they got into the story arc where they introduced a villain character but didn't get much play with it until it was cancelled.No, she had Lyme disease. Hallucinations were a symptom, but the question was resolved (for the audience), when the original avatar visited her while sleeping. I adored that... it was the most eloquent portrayal of the mystics dilemma I've ever seen.
The point of bringing it up, was that it's an example of having a really rational reason to believe something and yet still having doubts and issues based on the question of whether the experiences themselves even truly happened externally or not.