Is Lillie a disappointment?

I have to agree on it.

Her fear for Pokemon was pretty one-dimensional, lack of seriousness on it. Likewise, at this arc they handled to make her fear more realistic and it improved tons to the point you can say Lillie really suffered geniune PTSD.

Lillie has been getting good development since SM started. Her character is developing an whole lot, and i'm pretty sure she will get even more character development during the Aether/Ultra Beast arc.

I disagree.

She indeed did have a bit of development when SM started but it was quite one-dimensional and you could barely see her development for the first forty episodes of the series. She's getting the right amount of good development at this current arc, her growth feels truly realistic, serious and not intangible as it used to be.