It could do a bunch of stuff, and hologram projection was one of them.
Still inferior to Claude's nanomachines, but I suppose a low-tier Gatlain like Gil would be satisfied with it. :P
If he had stayed, he would've gotten mindsucked along with her. There's nothing he could have done to prevent it, because he didn't know that this could happen.
Hell, even Cas was caught completely off-guard by this event. Plus he insisted on asking Rose personally, so he wouldn't have been in the room to stop it even if he could had the power to do so.