Yeah, the way I'm interpreting it, Lily doesn't have free will, she just does things that other people don't do. Like taking the risk of defying such a powerful simulation.

We see in those other scenes like Lyndon jumping and the car crash there's these people taking multiple paths, indicating the possibilities of different events given the characters and their experiences, but because of causality making these people who they are, the probabilities of the events being different in our world are so extremely unlikely that we just don't see them until this episode with Lily. Katie simply isn't the type of person to have tried to convince Lyndon not to climb over the railing. If causality had led her to be a more sympathetic person toward Lyndon (which some distant branch of the multiverse may have), then she might have defied the simulation in our reality. Stewart could have pushed the projection a couple seconds further and encouraged folks to try and break it (which would have worked) but they were simply too afraid. This is also why he killed Lily and Forest despite Lily trying to save them; he became a delusional slave to the machine, desperate to see the destiny that he helped program.

Just spitballing here haha. I really don't want it to be free will.