[Nocte]

Yes.

Faction works as a series of variables. For example, most dark elves in Neriak worship Innoruuk, and certain classes are valued over others (non-necro casters are kind of looked down upon, for example). Obviously dark elves are preferred there over other races.

If you have a high elf enchanter that worships Tunare (bad example, since most chanters go agnostic), for example, your faction might break down like this (using totally made-up numbers):

high elf: -500 faction
enchanter: -100 faction
tunare follower: -500 faction
existing faction work: none
total: -1100 faction (let's call this scowling)

If you have a dark elf illusion on, you might get the following:
dark elf illusion: +200 faction
enchanter: -100 faction
Tunare follower: -500 faction
existing faction work: none
total: -400 (maybe this is dubious or apprehensive, but non-KoS)

If you were to put in the time (or in Neriak's case, red wine) to boost your faction while under an illusion, the existing faction work would eventually become dominant, and you might not need the illusion to remain non-KoS. Spells like Alliance give you a free +200 (or so) faction, too.

You might never get to max faction because I think there's a cap on how much work you can do (I doubt a Tunare-following high elf could ever get very high), and this is by design, but you can usually get in good enough to be non-KoS.