There is no minimum health threshold for this item, but if you have any movement buffs on you the item will fail. With a 2 minute cooldown you will have no choice but to kill the wisp. Once you have one properly orbed you will also become a wisp for 2 minutes, all the mobs in the area will become friendly, and the wisp will be compelled to return home. You will need to follow it, up the road and all the way to the back of the village.
If you turn around and run (float?) immediately after you get the update you can at least get out of the town before losing the illusion.