So, a lot of theories just got confirmed. :-) My next pet theory: The "villainess system" is not a villainess system at all, it's just the narrative engine of the game trying to resist Future!Elsa's tampering. The Reincarnated!Evie has been living in the tampered timeline from the start of the series, and we are only now getting the explanation of how the tampering that hacked a villainess route into the game that previously had none occurred in the first place. The original, untampered Elsa glitched out, fell in love with Evie, but when she died in a demon attack, Elsa went on a quest to obtain the Rings of Time and whatever weird shit happened to her irises, with enabled her to go back in the narrative and to interact with Evie, whom she has now sent even further back in the story, presumably to Elsa's own childhood, to set up a time loop where the villainess route not only exists, but can also progress past the demon attack event. In other words, this is actually the second time loop Future!Elsa facilitates: the first one created the villainess route, and the current one makes sure said route doesn't dead-end here. Maybe Current!Evie got reincarnated in the first place because it only became possible after the first loop?
This does make quite a lot of sense, and I reread some other comments before this one too.
But I just figured that a time traveling Elsa, who was previously a heroine in this game world, somehow learned about the villain system that's been haunting Yvonne and forcing her to do things she doesn't want to do. Of course in the original otome game, Yvonne is screwed either way and is always either murdered or attacked and killed when exiled. We know that the player (heroine) can have options but no one but the reincarnated Evie had to ever see the villain system. Whether or not the system was created against Future Elsa, there is a route/glitch as you say where of course Elsa falls in love with Evie in her own way, before the reincarnated mind is self aware. I just figured Elsa had to turn herself into some sort of villain in order to also see the system. They're both bound from speaking of it, but I figured even this time travel is just a different route, where the Time Travel is part of the plot and Future Elsa is the villain all along.
In normal circumstances, the default villain is always mean. Only when I guess masochist Elsa comes to love Yvonne (lol) does this whole time travel thing begin with our reincarnated girl here. And clearly we can see that the self aware isekai girl is still the "villain", but she can choose to be nice. Just like how if Witch Elsa is supposed to be "evil" but still doing this out of love for Evie, I'm sure we may find out that Witch Future Elsa may have done some horrible things to become the villain or take on and share part of the villainess system burdens.