If there is something inherently flawed about the illusion, I will do a secret saving throw to allow the character a chance to notice that something just aint right. This type of thing would happen if the caster is trying to do a dragon, but had never actually seen a dragon before.
If the character independantly decides that he does not believe what is happenning is real, he gets a saving throw. To do this, he has to actually act like he doesn't believe the illusion. i.e. To go back to the dragon illusion, he can't defend himself from the dragon, he has to act like the dragon isn't there. Obviously, if the character is wrong about the illusion, he most likely gets munched by the dragon. Essentially, disbelief is a full round action.
I can't remember whether illusions in C&C operate like illusions in 1e, where they do actual damage. Or whether they are like illusions in other versions of the game, where the damage isn't real and goes away (see the Phantasmal Force spell in the Moldvay Basic book, for example). Personally I prefer the former to the latter.
Perhaps more than any other class (although the thief and assassin are close), the effectiveness of the illusionist depends greatly on how the DM interprets the rules. I'd always want to talk to my DM a great deal before playing one. An illusionist in the hands of a creative player and an accomadating DM can be an incredible and very versatile force. I'm quite excited that the 'real' illusionist has been reborn in C&C.
R.A.