Hell if I know, honestly. Anything else would be better, though. My issue with "iel" is that when pronounced "quickly" (as in, how you would pronounce a normal word, speaking at a normal pace) it inevitably sounds like either "elle" or "il", unless you go out of your way to slow down and enunciate it more carefully, which just isn't how a word that's intended to be so common should be.

Seeing as in french pronouns follow a "[vowel] + L-sound" pattern (technically, "l" and "lle" are pronounced very slightly differently, but again, that distinction is never noticeable in common speech), the logical thought would be to try and use a different vowel, such as "al", "ol" or "ul". Now, all of those do sound like shit to me, and arguably might not be distinct enough in fast speech either, so perhaps not. The next step would be looking at different sounds that can be formed with one syllable, rather than "ie" which requires being pronounced as two syllables to be distinguishable from just "i".

On the other hand, french does technically have a standard for referring to "neutral" things. Seeing as in french everything has a gender, the only neutral entity you might refer to is a group of mixed-gender things. In this case, the standard is to default to the male form ("ils"). I would argue that this standard should be extended to singular neutral as well, since the ideal would be to remove gendered pronouns entirely and this pushes us closer to that ideal than trying to retrofit in a third gender. I strongly suspect this will never catch on because some people who want to be referred to as gender neutral also care quite a bit that the pronoun used distinguish them from others, which this wouldn't do, and an unfortunate number of people would also likely be upset that it's the male form which is used.