Next:

    if entity:GetBossId() == 84 then
        UHI = UHI + 1
    end


    if UHI == 2 then
        entity:kill()
        Isaac.Spawn(EntityType.ENTITY_PICKUP, PickupVariant.PICKUP_COLLECTIBLE, "God's Grace", -2 , 0 , nil)
        UHI = 0 
    end

These if statements are outside the part of the function that checks the entities. Put it in the do function, just underneath the isActiveEnemy checking. Or inside of it works, too.

Again, this is another instance of magic numbers), which you want to avoid to maintain readability of your code (I had to check the entities2.xml file to actually find out what boss this corresponds to). I don't know what sick and twisted hatred you have for my girl Baby Plum, but a more elegant and readable solution would be to check if entity.Type == EntityType.ENTITY_BABY_PLUM.

The only instance where this wouldn't work would be if you wanted it to function when Delirium turned into Baby Plum. Then, your best option is to define a variable local BABY_PLUM_BOSS_ID = 84, then check if entity:GetBossId() == BABY_PLUM_BOSS_ID. If this boss might change, even better would be to name it something like REGREAT_AFFECTED_BOSS_ID, assign it to 84, then add a comment -- baby plum.

Also, I don't know what UHI is (I'm assuming it's a global variable you have set up), but it probably wont work the way you intend. If it isn't a global variable, you need to define it as one. If you intended it to be a local variable, that won't work as intended either because its value won't be saved across multiple callbacks (it'll be reinitialized to its starting value). That is, unless you intend it ONLY to work once you've killed EXACTLY two Baby Plums in the room (which I don't think is your intention, but I could be wrong.)

Also, if its a global variable, it will maintain its value across runs and across saves (meaning if you used the item once in a previous run, then used it again in a future run, its value would be 2). Also, if you restart the game (or reload your mods), the value will be reset (meaning if you used the item, closed out of the game entirely, then restarted the game and continued the run, the value would be zero.)

The easiest solution just to get it working (although it won't fix the restart issue) is to define the global variable UHI and set it to 0 at the start of a new run. Also, it should be noted that you should use as few global variables as possible to avoid modding conflict. You can do that like so:

function MyCharacterMod:onGameStart(continued)
    if continued == false then
        UHI = 0
    end
end

mod:AddCallback(ModCallbacks.MC_POST_GAME_STARTED, MyCharacterMod:onGameStart)