As far as the 'illah is concerned, it is probably more appropriately translated as a "hidden defect" or a "subtle defect." A hadith mu'allal, is a hadith that seems to be sound on the surface, meaning that it fulfills the first four conditions, but when scrutinized by an expert muhaddith, suffers from a "hidden defect." Such defects can be found in either the matn (text) or the sanad (chain) of a particular hadith. However, only a hadith scholar with comprehensive knowledge regarding the ahadith with similar wording or regarding a similar topic as well as detailed information regarding narrators' dates of birth/death, travels, teachers, students, etc. can discern an 'illah. Scholars of this level of expertise are almost non-existent in our era. I'll try and post a few examples of hadith mu'allal later, inshallah.