(This is how I think of it. If I'm in a minority, I'm sure someone will point it out with great glee.)
I know what you mean. A big part of the problem is often because we translate "imagonem" as "illusion". This is a mistake - it's "an image", not an illusion. In genre (i.e. in magic literature/film/etc.), there are roughly 3 types of "illusions", and two are completely misleading models for Creo Imagonem.
One is all in the mind, a hallucination, purely internal and personal - AM imagonem is not that. CrIm spells never target "the mind" or a person. (These are the type that typically "don't affect undead or unthinking creatures".) That's all Mentem.
There is also the type of illusion where something is there, but it is disguised or glamoured. CrIm is not that either (necessarily) - you can drop a CrIm on top of something else, but CrIm effects do not rely on any "other thing" to take effect. (MuIm works this way - not CrIm.)
The third is to create "an image" of a thing that is simply not present or real, and let any thinking beings (who are nearby and able to sense it) to perceive and interpret that image. This is how AM CrIm works.
The classic is the visual mirage, that, for instance, might create "an image" of an oasis for the eyes, which perceive that image as water and palm trees/etc. There is nothing there, yet it is sensed - but what is "it"? "It" is the radiating image of an oasis, literally as if a false stream of external data was being fed to the eyes of anyone/anything looking.
But it's parallel if it affects a different sense. There is nothing making noise, but there is the stimulus that makes us perceive noise. There is nothing to taste, only the (magically created) stimulus that makes us taste something. Nothing stinks, but the triggers that make us smell "stink" radiate out from the magic.
These base effects create "an Individual amount" of species (approx equal to a grown human). For sound/smell/taste, what is the diff between "species" and the real thing? It's the diff between flickering firelight and real fire. It's the diff between feeling heat and actually being burnt. It's the diff between smelling something and that "something" actually being there to make a smell.
Species are particles that radiate from any object, that carry "the image" out and away from that object and trigger perception when they hit a sense organ. The easiest way to think of "species" is, essentially, like light radiating out from something glowing, only diff appropriate to any sense. Species is the stuff that triggers the perception, carrying "the image" from the object that is creating the species to the viewer/listener/smeller/taster/senser. But with CrIm, the "thing" is not there - just the stuff triggering the perception of it, radiating out from the magic. So the species have nothing concrete or substantial behind them - thus the "illusory" aspect. The species are just as real, but the thing that one would expect to find sending them is missing.
Here is a below average diagram of non-magical species & source:
Something stinky --> i species [/i]--> Nose -> Perception of "something stinky"
With our modern understanding, we know that molecules of the "something stinky" get into our clothing, and we carry them around, and they release more molecules, and that's what we smell. But with the model that "species" are what are released, once the magic is gone there is no thing in the clothing to send that signal - species by themselves don't create the thing to trigger more species (refer to diagram above).
So, just as an illusion of a sword does not cut (there is nothing solid), and the illusion of blood does not stain (it's only an image), the illusion of a smell does not "permeate" clothing/etc - it's only the perception of the smell carried to the senser, as if the thing creating the stench was there - but there is nothing to cause the stench, only the magically generated species triggering the perception. And, like a visual illusion - there is nothing "there" besides that perceived image.
The smell is not carried because the thing that sends the trigger is no longer present. It's exactly like trying to carry light into a dark cave.
Or that's how I understand it. Does that help at all, or is it clear as illusory mud?
Actually, if all that gibberish above is correct, I think it would have to have Rego.
If it were MuIm, and the person's smell was changed, then it would be all "on them", in every sense. But to create species magically, those just radiate out from where they were created unless Rego'd to move somewhere else.